March, 2009

Welcome to Spring ... and for some of you, I know it could not have arrived early enough!

To many of us, Spring means a time when things bloom... others relate it to being a time of "newness!"

This month we are presenting lots of "new." Inside our newsletter we are addressing the new COBRA law ( our feature article), a new I-9 form, a new review of Independent Contractor classifications and new "heads-up" for employee access to personnel files.

Let's get started!

New I-9 Form and Delayed E-Verify for Federal Contractors U.S. Citizenship and Immigration Services (USCIS) issued a press release on January 30 delaying the implementation of the regulation requiring employers to use a new Employment Eligibility Verification Form (Form I-9). The new form was originally scheduled to be required on February 2, 2009. USCIS instead reopened the comment period on the new regulation through March 4 and currently plans to implement the new form and corresponding documentary changes on April 3. Employers now must use the new form beginning April 3, 2009 unless the Obama Administration changes it during a pending review. The current edition of the form (dated "06/05/2007") will no longer be valid and its use will subject an employer to civil penalties. The new rule requires that unexpired documents be provided by employees and revises the list of acceptable documents for identification and employment authorization purposes. You can see the proposed new form HERE. And the government has promised to release a new handbook for using the new form. In addition, the regulation requiring certain federal contractors to use E-Verify was again delayed until May 21. The Bush Administration had published a new regulation in November of last year requiring many federal contractors to use E-Verify for new hires and to reverify existing employees working on covered contracts. The implementation and effective date of the regulation was initially delayed from January 15 to February 20 in the face of a lawsuit by interested business groups contesting the validity of the regulation. The Obama Administration again delayed implementation to May 21 not only due to the pending lawsuit, but also as part of an overall review of several recently promulgated regulations.

Independent Contractors In Focus Congress is said to be considering legislation to enhance the Internal Revenue Service's ability to enforce rules on employee/independent contractor classifications. Meanwhile, a recent legal update article from national SHRM indicates litigation is increasing over misclassified workers. States seem to be interested in such classifications because misclassified workers may be a source of untapped tax revenue. If you have independent contractors, you should verify you know what IRS factors allow for a legitimate classification ( see here) and consider having the agreement in a writing that actually and honestly reflects the factors used to establish independent contractor status. NOTE: MJMS can assist you in the process of examining the status of your workers. We can assist in drafting appropriate Agreements for Services for your Independent Contractors. Contact us at 480-924-6101

Ex-Employee Access To Personnel Files In California The California Labor Commissioner has interpreted the state's Labor Code Section 1198.5 as meaning that both current and former employees should be granted access to their personnel files when requested. That does not include records relating to possible criminal violations, letters of reference, records obtained before the employee's employment or any records related to a promotional exam. Be sure you give a personal copy of every document to an employee when you require that employee to sign the document. California Labor Code Section 432 says an employee has a right to a copy of any document that he/she signs relating to the obtaining or holding of employment. [SOURCE]: Hermann, Gary, Labor Law Consultant, California Chamber of Commerce, "Alert", January 9, 2009,

And ... here is the monthly quiz! How up to speed are you about overtime pay?
 

Two employers on the same premises have an agreement to share the services of a janitor to perform work for both firms. In one workweek, the janitor works 30 hours for one employer and 20 hours for the other. In another workweek, the janitor works 40 hours for one employer and 10 hours for the other employer. For which workweek is the employee owed overtime, under the Fair Labor Standards Act?

A. Neither workweek

B. Only workweek one (30 hours for one employer and 20 hours for the other)

C. Only workweek two (40 hours for one employer and 10 hours for the other)

D. Both workweeks

 
Answers are found at the end of the main article.

Now to my main article on the new COBRA laws!

Signed by President Obama on February 17, 2009, the American Recovery and Reinvestment Act of 2009 ("ARRA" or the "Act") expands COBRA in ways that, although temporary, will certainly impact employers. Most significantly, the ARRA offers "assistance eligible individuals" (AEIs) a 65% subsidy of their required COBRA premiums and an additional enrollment period within which to elect COBRA coverage. 

The Subsidy:

The ARRA gives eligible individuals a 65% subsidy of the COBRA premiums they would be required to pay for any group health plan in which they participated at the time of their termination. Eligible individuals who elect COBRA can benefit from the subsidy for up to nine months. The subsidy does not apply to flexible spending accounts.

Who is Eligible :
 
An assistance eligible individual (AEI) is any person who loses health coverage as a result of being "involuntarily" terminated" between September 1, 2008 and December 31, 2009, and the terminated person's dependents, as long as the person's adjusted gross income (with certain modifications) is $125,000 or less ($250,000 or less for joint filers).
 :
The term "involuntary termination" is not further defined in the Act. However, the Conference Committee report adds that a termination for gross misconduct would not qualify the employee for the subsidy (since he or she would not qualify for COBRA coverage at all).
 
Earlier this month, the Department of Labor ("DOL") released model COBRA Notices required under the COBRA provisions of the 2009 American Recovery & Reinvestment Act ("ARRA" or "Act"). 

The DOL model notices contain information that COBRA qualified beneficiaries must receive about their eligibility to receive a subsidy toward payment of their COBRA premiums in different situations. There are four model notices, which can be found at http://www.dol.gov/ebsa/COBRAmodelnotice.html 

1. A General Notice (full version) that can be used for all qualified beneficiaries in connection with any type of qualifying event that occurs at any time from September 1, 2008 through December 31, 2009. This version contains the "regular" COBRA notice as well as the additional notifications required by ARRA; 
   

 

2. A General Notice (abbreviated version) that can be provided to former employees who have experienced a qualifying event on or after September 1, 2008, who elected COBRA coverage, and who still maintain that COBRA coverage; this model can also be used in conjunction with a "regular" COBRA notice to update it for ARRA;
   

 

3. A Notice in Connection with Extended Election Periods, which must be provided to any "assistance eligible individual" whose qualifying event occurred at any time from September 1, 2008, through February 16, 2009, and who either did not elect COBRA continuation coverage, or elected COBRA continuation but subsequently discontinued it; this is the Notice that must be provided by April 18, 2009
   

 

4. An Alternative Notice that can be used by insurance companies for individuals who are, or become, eligible for continuation coverage under a State law (often referred to as "mini-COBRA" and in California, known as "Cal-COBRA") due to a qualifying event that occurs between September 1, 2008 and December 31, 2009

The Bottom Line:
 
Employers and COBRA Administrators will have to tailor these COBRA Model Notices to comply with the administrative procedures and other requirements of their particular group health plans. In addition, in the case of the Alternative Notice, insurers will have to be sure that their Notices conform to the applicable State law.
 
If you have questions about how this impacts your business, you should contact your insurance carrier or your agent immediately. Remember these notices must be provided to AEIs by April 18th.
 

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Answers to our Quiz:
Correct Answer: D Both workweeks 


Explanation: 
If an employee works for two completely independent employers at the same time, no overtime is owed as long as the employee works no more than 40 hours for either employer. If, however, an employee is employed jointly by two or more employers, overtime is owed if the employee's combined hours for the joint employers exceeds 40 in a workweek.

DOL's Wage and Hour Division considers that a joint employment relationship exists in the following circumstances:

• Shared employment where there is an agreement between employers to share an employee's services, such as when two employers on the same premises arrange to employ a janitor or watch person to perform work for both firms. Even though each employer carries the employee on its payroll for certain hours, the employee is considered jointly employed by both companies, and both are responsible for making sure that proper overtime is paid. 
  

 

• Where one employer is acting directly or indirectly for another employer, such as a temporary agency that sends an employee to one or more assignments with various companies. The temporary agency is responsible for proper overtime payment if the employee works more than 40 hours in a workweek on the assignments that it provides. The particular company where an employee is assigned is jointly responsible with the temporary agency only if the employee works more than 40 hours in a workweek for that establishment. 
  

 

• Where the employers are related to each other because one employer controls, is controlled by, or is under common control with the other employer.

Warning: A joint employment relationship will exist if a regular employee is assigned to a second job with the same employer through a temporary agency. An example would be a clerical worker who works nights and weekends through an agency and is assigned to his or her primary employer to do emergency filing.

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ABOUT MJMS, INC.

President and Principal Consultant: Margaret Jacoby, SPHR

Margaret Jacoby has more than 25 years of Human Resources and professional management experience in a variety of industries. She has designed human resources infrastructure and implemented systems to ensure compliance with state and federal employment laws. She has directed high quality human resources functions for small and emerging businesses, and served as an external consultant to a wide range of diverse organizations, including non-profits.
 
Her work has included: 

• Conducting H.R. Needs Assessments
• Drafting employee handbooks and policy manuals
• Conducting job analysis and developing position descriptions
• Conducting on-site compliance audits
• Counseling management on progressive discipline
  
• Drafting and review of employee disciplinary actions
• Providing mediation in employee/employee conflict
  
• Training employees/supervisors/managers in the implementation of human resources systems and policies such as Sexual Harassment
• Conducting workshops for business owners on H.R. compliance issues.

 
Ms. Jacoby has earned the nationally-recognized certification of Senior Professional in Human Resources (SPHR) from the HR Certification Institute, Society for Human Resource Management (SHRM).
 
Ms. Jacoby's professional affiliations include:

• Professionals in Human Resources Association (PIHRA)
• Society for Human Resource Management (SHRM)
• National Association of Women Business Owners (NAWBO), Los Angeles and Phoenix
• California Chamber of Commerce


• Arizona Small Business Association (ASBA)
• Long Beach Community Business Network (LBCBN)
• Institute for Management Consultants (IMC)

The information contained in this newsletter is provided as general information and is not a substitute for legal or professional advice. The information is provided by MJ Management Solutions, Inc. and while we endeavor to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the newsletter or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.