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Publications | November 15, 2017
3 minute read

HR Focus – News Digest – Fall 2017

    Many employers with wellness programs impose a premium surcharge for participants who are smokers but allow participants the ability to avoid the surcharge by completing a tobacco cessation program. Under ERISA regulations, an employee who meets a wellness program’s alternative standard must earn the full reward for the plan year. The Department of Labor (DOL) recently took action against an employer for allegedly violating this rule. In this case, when an employee completed the smoking cessation program during the plan year, the employer only stopped applying the surcharge for the remainder of the plan year. But, the DOL argued that the employer must also reimburse the participant for the surcharge retroactively to the start of the plan year.

    Service providers play a critical role in administering benefit plans, but a plan sponsor is ultimately responsible for the plan’s operation. An important part of a plan sponsor’s fiduciary duties is regularly reviewing its service providers, including a review of fees, scope of services, expertise and overall performance. While a plan sponsor doesn’t necessarily have to change service providers based on this review, regularly engaging in—and documenting—a thorough review process is critical to showing compliance with its fiduciaries duties.

    In July, the U.S. Department of Justice and the U.S. Equal Employment Opportunity Commission (EEOC) filed conflicting briefs in the federal Second Circuit Court of Appeals. The court is considering whether Title VII prohibits discrimination based on sexual orientation.  The EEOC argues that federal law prohibits sexual orientation discrimination. The DOJ argues that the law does not. The EEOC’s position is consistent with its interpretation of the law and its prior enforcement efforts. In contrast, the DOJ’s argument is a reversal from its prior position under the Obama Administration. The federal Sixth Circuit Court of Appeals (which has jurisdiction over Michigan) has consistently held that Title VII does not prohibit sexual orientation (or gender identity) discrimination. This issue may well end up before the U.S. Supreme Court. 

    In 2016, the U.S. Department of Labor issued a new overtime rule under the Fair Labor Standards Act. That rule raised the salary threshold for exempt employees from $455/week to $913/week. Before the new rule could take effect, a federal court in Texas issued a nationwide temporary injunction. After President Trump took office, the DOL essentially dropped its appeal of the injunction.  In July, the DOL published a new request for information regarding the overtime exemptions for executive, administrative, professional, outside sales and computer employees. The DOL’s RFI indicates that changes to the overtime rules are likely still coming. DOL Secretary Alexander Acosta has indicated that he is not opposed to raising the exemptions’ salary threshold, just not to the high level set in the 2016 rule. The comment period for the DOL’s RFI has now closed. The DOL will use the comments to prepare a Notice of Proposed Rulemaking, which will then have its own comment period before a new final rule is issued.