Employment Law Updates

2009 OREGON LEGISLATURE SESSION IS IN FULL SWING

The 2009 Legislature has been in session for several months now, and after quickly introducing dozens of employment related bills, your legislators are now separating the wheat from the chaff.  As part of that process, the Legislature established April 28, 2009 as the deadline for pushing bills out of committee; if a bill is still in committee after that date, it is effectively dead.  Visit the Hershner Hunter, LLP website to see the latest legislative session update.

UPDATE ON THE COBRA SUBSIDY PROGRAM

As you have probably heard by now, on February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (routinely referred to as the “stimulus bill” or “ARRA”).  Since ARRA was enacted, the Department of Labor, the Internal Revenue Service, and the State of Oregon have been busy filling in the gaps regarding the COBRA premium subsidy programs.  Here are some highlights:

 

1.         What is an involuntary termination?    

An involuntary termination occurs when employment is severed by the employer and the termination was not due to the employee’s implicit or explicit request.  An involuntary termination also occurs if there was a temporary layoff with recall rights and during the layoff, the employee’s hours were reduced to zero and the employee suffered a loss of health coverage.  However, if an employee’s hours are reduced but are still greater than zero, the mere reduction in hours does not create an involuntary termination, even if the employee loses health coverage because of the reduction in hours.

 

2.         Is the entire COBRA premium subject to the subsidy?        

That depends.  Some employers provide continuation coverage to persons not entitled to it under COBRA.  For example, pursuant to COBRA, only the employee, spouse and dependent children are entitled to COBRA continuation coverage.  However, many employers also offer continuation coverage to same-sex domestic partners and others who live in the employee’s household.  In that case, the COBRA premium subsidy only applies to the premiums for coverage for the employee, spouse and dependent children.  For example, assume the premium to continue coverage for a former employee, her dependent child and her same-sex domestic partner totals $1,000 per month.  Only that portion of the $1,000 premium attributed to the employee and the employee’s dependent child is eligible to the COBRA premium subsidy.  The balance of the premium (that attributed to the same-sex domestic partner) will need to be paid entirely by the former employee.

 

3.         If an assistance eligible individual is eligible for other group health plan coverage but does not enroll in the other plan, can the individual still receive the COBRA premium subsidy? 

No.  For traditional COBRA purposes, once the person is eligible for and enrolls in another group health plan coverage, he/she is no longer eligible for COBRA continuation coverage.  However, for purposes of the COBRA premium subsidy, once the individual is merely eligible to enroll in another group health plan, the person is disqualified from receiving the subsidy.

OREGON LAW UPDATED IN RESPONSE TO THE COBRA SUBSIDY PROVIDED IN THE ARRA

For those employees working for smaller employers not subject to COBRA, Oregon has recently updated its insurance continuation laws to be more aligned with the recent federal COBRA subsidy program.  On April 28, 2009, Governor Kulongoski signed into law a bill that (1) extends the amount of time former employees can continue coverage through the state continuation program from six months to nine months; (2) gives some Oregonians a second opportunity to decide to continue coverage; and (3) requires insurers to notify all employer groups and individuals whose jobs ended between Sept. 1, 2008 and Dec. 31, 2009 of the possibility that they qualify for this program.  Oregonians who worked for small employers and lost their jobs on or after Sept. 1, 2008, should receive a notice in the mail no later than June 1, 2009, that further describes the subsidy and gives instructions on how to sign up. 

COBRA PREMIUM SUBSIDY – WHAT EMPLOYERS NEED TO KNOW

As you may have heard, the stimulus bill signed by President Obama on February 17, 2009 provides up to a nine-month COBRA subsidy for eligible employees who are involuntarily terminated between September 1, 2008 and December 31, 2009.  During the subsidy period, eligible individuals will be required to pay only 35% of the COBRA premium.  The remaining 65% of the COBRA premium is initially borne by the employer, but will be reimbursed by the federal government when the employer seeks a credit on employment taxes or requests direct reimbursement. 

 

Only employees who have been involuntarily terminated are eligible for the COBRA premium subsidy – so employees who have resigned or have retired are not eligible for the subsidy.  For employees who were previously involuntarily terminated and originally declined COBRA coverage, the former employer must provide them with a written notice of their right to elect coverage by April 17, 2009, along with any forms necessary for them to establish their eligibility for the premium subsidy.  The employees will have 60 days after receiving the notice to elect COBRA coverage.  Should someone in that group elect COBRA coverage, the coverage will be effective retroactive to March 1, 2009.  The COBRA premium subsidy applies to all premiums due from the former employee – even that portion of the premium related to coverage for family members.  Also, the COBRA premium subsidy is available to qualified beneficiaries who elect COBRA as a result of the involuntary termination.

 

The COBRA premium subsidy is also required for state-mandated continuation coverage.  That means small employers who are not subject to COBRA may still be required to make the subsidy available.  The Department of Labor will be publishing the required notices no later than mid-March 2009.  Employers with questions regarding the COBRA premium subsidy should consult with their employment law attorney to make sure their practices comply with this new law.

TAKE AFFIRMATIVE STEPS TO STAVE OFF EMPLOYEE FRAUD

Even in the best of economic times, employees defraud their employers.  When times are tough, like now, the incentive to take from one’s employer is even greater.  To minimize your company’s exposure to fraud from within, Leah DiGregorio, a Portland CPA, suggests taking the following steps: (1) implement and monitor internal controls to create an environment where the opportunity for fraud is minimized; (2) be alert to the pressures and rationalizations employees may experience like the loss of a spouse’s job or addiction or gambling problems; and (3) look for fraud warning signs like rising costs without explanation, an employee with too much control, or an employee who is unwilling to share duties.  A vigilant, proactive approach to employee fraud could save your company thousands if not millions of dollars.   

EMPLOYERS MAY BE SUED FOR EMPLOYEE’S CELL PHONE USE

Did you know that your company could be held liable for an accident caused by an employee’s use of a cell phone while driving?  Several such cases settled recently for millions of dollars each.  All of those cases were premised on the rule that an employer can be held liable for damages if an employee injures someone in a vehicular accident while using a cell phone, even if the employee was using her own phone or making a personal call.  Not only is the use of a cell phone while driving a proven hazard, it can have severe financial consequences for your company.  Accordingly, employers should strictly prohibit the use of cell phones while driving company vehicles and/or on company time.