COMPLIANCE REVIEW FOR 2009

1. COMPLIANCE REVIEW FOR 2009 Thomas N. Dondore, SPHR HRS/TND Associates, Inc. www.hrstndassociates.com 610/371-9505 Serving America From offices in Pennsylvania, Maryland and Delaware Contributors to this presentation are Sean Glasser, Bob Werkheiser, Carol Pinkasavage, PHR, Rita Burns, SPHR, Gary Dologite, SPHR, Mike Scheerer, MEd MBA, Mike Krepps, SPHR, Chuck McCormick

2. ADAAA Changes • Effective 1/1/2009 • Millions of employees not previously covered by ADA now covered (160 million + vs. 43 million) • Legislative fixes for court rulings • Expansion of term “disability” HRS/TND Associates, Inc.

3. Expanded Definition of “Disability” • The Act retains the ADA's basic definition of "disability" as an impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment. However, it changes the way that these statutory terms should be interpreted HRS/TND Associates, Inc.

4. Expanded Definition of Disability • “substantially limits” no longer will be defined to mean either “significantly restricted” or “severely restricted” HRS/TND Associates, Inc.

5. Expanded Definition • Adding a definition of “major life activities” to the ADA, including a lengthy illustrative list of major life activities, including caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, working and the operation of a major bodily function, such as functions of the immune system, normal cell growth and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions. HRS/TND Associates, Inc.

6. Expanded Definition • States that mitigating measures other than "ordinary eyeglasses or contact lenses" shall not be considered in assessing whether an individual has a disability • Providing that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active. HRS/TND Associates, Inc.

7. Expanded Definition • Now someone with an impairment can be regarded as having a disability, even without the perception that the impairment limits a major life activity, provided that the impairment is not an impairment with an actual or expected duration of six months or less. HRS/TND Associates, Inc.

8. “Regarded As” • The ADAAA does include a provision that makes it clear that if someone is protected under the Act only because they are regarded as having a disability, no accommodations need to be made for that person. HRS/TND Associates, Inc.

9. ADAAA Summary • Congress’s clear intent is to provide ADA coverage to more people • Require courts to apply a less demanding standard to determine who is covered • Congress wants courts to focus on whether discrimination based on disability actually occurred HRS/TND Associates, Inc.

10. ADAAA Summary (cont.) • Strongly suggests employers will need to make reasonable accommodations even if employees are fully able to perform with meds or devices HRS/TND Associates, Inc.

11. So What’s New Lately…NLRA – ‘Card Check’ • Employee Free Choice Act stalled in Congress but still worrisome • Would allow union to be formed if over 50% of workers sign cards, eliminating current requirement of a secret ballot • Would also require binding arbitration if union & employer fail to agree on first contract within 90 days HRS/TND Associates, Inc.

12. Employee Free Choice Act (Card Check) • Federal government-supervised private ballot elections best protect the privacy rights of individual employees in choosing whether to join a union HRS/TND Associates, Inc.

13. Employee Free Choice Act • By effectively eliminating the private ballot, the Employee Free Choice Act would actually take away an employee’s private and “free choice,” expose employees to coercion and encourage a threatening workplace for employees. HRS/TND Associates, Inc.

14. Employee Free Choice Act • Americans overwhelmingly support the right to a private vote for workers, according to a poll of 1,000 likely voters in the U.S. conducted in January 2009. 82% favor a federally supervised election over card checks as a means to “protect the individual rights of workers.” HRS/TND Associates, Inc.

15. Employee Free Choice Act • Mandatory binding arbitration would impose unwanted employment conditions on both employees and employers HRS/TND Associates, Inc.

16. Employee Free Choice Act • Under EFCA, employees would simultaneously lose their rights to vote on union representation and to approve workplace contracts. HRS/TND Associates, Inc.

17. HIPAA covered entities • A health plan • Insurance brokers • Employers who offer employee healthcare benefits or wellness programs • Others HRS/TND Associates, Inc.

18. HIPAA and ARRA • Effective February 17, 2010 • ARRA imposes new HIPAA privacy and security requirements on entities associated with group health plans • ARRA has extended HIPAA's privacy and security rules to business associates and other vendors directly and has enhanced HIPAA's civil and criminal penalties, including a provision permitting protected individuals to share in monetary penalties collected by the government HRS/TND Associates, Inc.

19. HIPAA changes to improve Privacy & Security Rules • Increased Civil Monetary Penalties • Previously: $100 per violation, cap of $25,000 per calendar year • Effective February 18, 2009 HRS/TND Associates, Inc.

20. Categories of HIPAA Violations and Respective Penalty Amounts Available Violation Category Each violation All such violations of an Identical provision in a calendar year Did Not Know $100 - $50,000 $1.5 million Reasonable Cause $1,000 - $50,000 $1.5 million Willful Neglect $10,000 - $50,000 $1.5 million Corrected Willful Neglect – $50,000 $1.5 million Not Corrected HRS/TND Associates, Inc.

21. HIPAA Breach Notification Rule • rule became effective 9/24/09 • covered entities must notify affected individuals of breach in writing or by email within 60 days of discovery • Breaches affecting populations of 500 or more must also be reported to HHS secretary HRS/TND Associates, Inc.

22. Enforcement Rule Changeseffective 2/17/2010 • State attorney general authorized to bring actions against persons who violate HIPAA if believed that the violation threatens or adversely affects any resident of the state. • Attorney general must file with U.S District Court for appropriate jurisdiction, and must provide HHS with notice of the action. • State attorney general may impose injunctions against further HIPAA violations HRS/TND Associates, Inc.

23. HIPAA to do • Before the ARRA's provisions concerning HIPAA becomes effective in February 2010, employers should revisit their own HIPAA compliance efforts, discuss with their business associates the security measures that have been implemented to reduce the risk of a security breach involving unsecured PHI, and amend their business associate agreements to address the new compliance obligations and risks created by ARRA HRS/TND Associates, Inc.

24. Minimum Wage Increase On July 24, 2009, Federal & PA minimum wage to $7.25/hr • To Do: • Ensure new FLSA minimum wage poster is up in your workplace • Double check payroll fail-safe is applicable when employees receive a fluctuating ‘regular rate’ (ie piece rate basis, day rate basis) • If employees paid less than minimum wage b/c of tips, ensure that tips plus minimum $2.13/hr = $7.25 HRS/TND Associates, Inc.

25. Lilly Ledbetter Fair Pay Act • Essentially changes the statute of limitations for claim filing • Allows employees to file claims within 180 days of the receipt of any pay affected by the discrimination • Limits back pay recovery to last 2 years prior to the claim’s being filed HRS/TND Associates, Inc.

26. More Pay Related Legislation? • Paycheck Fairness Act passed by House, now in Senate committee • Imposes harsher penalties for violations of the Equal Pay Act of 1963 • Would make it more difficult for employers to defend disparities in male/female pay • Would make ‘class action’ suits by employee groups easier HRS/TND Associates, Inc.

27. What Now???? • Review all comp policies, procedures, programs for discrimination • Audit all job classifications for pay differentials, and rationale for any that exist HRS/TND Associates, Inc.

28. What Now???? • When conducting anti-discrimination training, tell employees about claim procedure for pay inequities • Review existing records to ensure info to defend a lawsuit is available HRS/TND Associates, Inc.

29. New I-9 Form • Used after April 3, 2009 • Used for new Hires & reverifications • All documents presented must be valid & unexpired • Non use subject to fines & penalties HRS/TND Associates, Inc.

30. E-Verify Rule • Started September 8, 2009 • Employers sign memo of understanding which allows investigators to enter workplace & examine I-9 forms & E-Verify records • Like an audit BUT NO advance notice required • Federal contract or subcontract with FAR clause requires participation HRS/TND Associates, Inc.

31. No Match (SS #) • October 19, 2009 • No-Match rescission leaves matter in limbo • Federal judge imposed a temporary injunction blocking enforcement • Do not know what Social Security will do now • DHS has issued new work site enforcement guidelines redirecting the focus from illegal workers to employers. • Employers can expect the DOL to increase investigations of employers that use but don't follow the rules of the non-immigrant worker programs. HRS/TND Associates, Inc.

32. Genetic Information Nondiscrimination Act • Act amends ERISA to restrict the collection and use of genetic information in connection with group health benefits. • Group health plans and insurers are now, generally, prohibited from imposing a preexisting condition limitation on the basis of genetic information where a genetically pre-disposed disease or disorder has not yet manifested itself • *Included in new EEOC Poster* HRS/TND Associates, Inc.

33. What is the COBRA subsidy… • Extension of election period for AEI’s • Obligation to inform of alternate coverages • 35/65 split of cost of COBRA PREMIUM • Government repayment of 65% of COBRA premium HRS/TND Associates, Inc.

34. Current COBRA Under ARRA • Last day to be eligible for subsidy is December 31, 2009 • Subsidy can last for up to 9 months • Covers Health, Dental, Vision, EAP’s and HRA’s • Eligibility for other health coverage disqualifies COBRA participant from subsidy HRS/TND Associates, Inc.

35. Proposed Subsidy Changes • Extend COBRA period from 18 months to 24 months for those who are terminated or have a reduction of work hours between April 1, 2008 and January 1, 2010 • Extend subsidy eligibility through June 30, 2010 HRS/TND Associates, Inc.

36. PA Mini-COBRA and Subsidy • Non-subsidy eligible: • Voluntary termination of employment, retirement, reduction of work hours, loss of dependent status, divorce, Medicare entitlement, death of employee (9 months) • Medical and HRA’s only • Subsidy eligible: • Involuntary termination or layoff (9 months, all subsidized) • Eligibility began July 10, 2009 • New timelines, new stipulations HRS/TND Associates, Inc.

37. PA Mini-COBRAFacts • Unlike most Minis in other states, employer is mostly responsible, not carrier • Carriers had to notify all covered individuals that mini-COBRA exists- employer now has all responsibility • ??? Notification of future hires • Medical plans only, no vision, dental, etc. • Enforcement by PA Department of Labor, HHS, USDOL, IRS HRS/TND Associates, Inc.

38. PA Senate Bill 189 • Allows certain dependents to remain on parents’ health plan up to age 30 • Eligible dependents must: • Be unmarried • Have no dependents • Are PA residents or Full-time students • Are not eligible for other health plans HRS/TND Associates, Inc.

39. Michelle's Law • Effective for plan years beginning on or after November 8, 2009 (January 1, 2010 for calendar year plans) • Extends eligibility for group health benefit plan coverage to certain dependent children over the age of 18 who are enrolled in an institution of higher education. • Covers those who would otherwise lose coverage when a medically necessary leave of absence causes the child to fall below full-time student status. • Extension of eligibility is intended to protect group health benefit coverage of a sick or injured dependent child for up to one year HRS/TND Associates, Inc.

40. 2010 Retirement Plan Cost of Living Adjustments Qualified Plans Maximum Compensation Limit. • The limit on compensation for purposes of calculating contributions and benefits under qualified retirement plans remains at $245,000. Defined Benefit Plans. • The maximum annual benefit under a defined benefit pension plan remains at $195,000. Defined Contribution Plans. • The dollar limit on annual additions (i.e., all contributions and forfeitures) for participants in defined contribution remains at $49,000. Highly Compensated Employees. • The highly compensated employee (HCE) threshold remains at $110,000. HRS/TND Associates, Inc.

41. 2010 Retirement Plan Cost of Living Adjustments 401(k)/403(b)/457(b) Plans. • The maximum annual elective salary deferral under a 401(k), 403(b), or 457(b) plan remains at $16,500. Catch-up Contributions. • The maximum allowed catch-up contribution under 401(k), 403(b), and governmental 457(b) plans remains at $5,500. Social Security Wage Base. • The Social Security Administration announced that the wage base will remain at $106,800. HRS/TND Associates, Inc.

42. HSA Rules • Annual contribution limitation. For 2010, limitation on deductions for an individual with self-only coverage under an HDHP is $3,050 (up from $3,000) and is $6,150 (up from $5,950) for an individual with family coverage. • High deductible health plan. For 2010, an HDHP is a health plan with a deductible not less than$1,200 (up from $1,150) for self-only coverage or $2,400 (up from $2,300) for family coverage, and under which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,950 (up from $5,800) for self-only coverage or $11,900 (up from $11,600) for family coverage. HRS/TND Associates, Inc.

43. Forms Timing on notices Awards and Bonuses Call-in procedures Clarified time for recert for ongoing conditions Medical Cert Caregiver leave Exigency leave Clarity on Serious condition Clarity on intermittents Direct contact with providers Summary FMLA Changes Effective 1/16/09 HRS/TND Associates, Inc.

44. Revised Definition of “Serious Health Condition” NEW! • In the absence of extenuating circumstances, the first (or only) visit must occur within seven days of the start of the incapacity, and the second visit must occur within 30 days of the start of the incapacity. • For purposes of establishing a chronic serious health condition, there must normally be at least two visits to a health care provider each year. HRS/TND Associates, Inc.

45. FMLA: Employee Responsibilities • If the FMLA leave approved is intermittent FMLA, the employee: • should consult with supervisor and make reasonable effort to schedule leave around work operations when planning medical treatment. • should follow the company's call in procedure and must refer to the qualifying reason for leave or the need for FMLA leave. • When returning to work, provide fitness for duty certification as required CLARIFIED HRS/TND Associates, Inc.

46. FMLA: Employer Responsibilities • Determine if employee is eligible for FMLA: • Employed for at least 12 months AND has been employed for at least 1,250 hours of service during the 12-month period immediately preceding the commencement of the leave. • Unused balance of the 12-week FMLA entitlement. • Review the “FMLA Employee Request Form” for completeness. NEW! NEW! HRS/TND Associates, Inc.

47. FMLA: Employer Responsibilities • Provide the employee with the appropriate “FMLA Medical Certification Form”. • Employee’s own serious health condition, • a family member's serious health condition, • adoption/foster care, • a qualifying exigency for military family leave OR • leave to care for injured military servicemember. NEW! NEW! HRS/TND Associates, Inc.

48. NEW! FMLA Max to Care for Servicemember • Permits a spouse, son, daughter, parent, or next of kin” to take up to 26 weeks of leave to care for a “covered military member of the Armed Forces for a serious injury or illness in line of duty on active duty” • Leave entitlement is applied on a per-covered servicemember, per-injury basis • Any of the 26 workweeks not used in single 12-month period are forfeited • Employee entitled to combined total of 26 workweeks of leave for any FMLA-qualifying reason during the single 12-month period. HRS/TND Associates, Inc.

49. NEW! “Qualifying Exigency” defined • Leave defined in following broad categories: • Short-notice deployment; • Military events and related activities; • Childcare and school activities; • Financial and legal arrangements; • Counseling; • Rest and recuperation; • Post-deployment activities; and • Additional activities not encompassed in the other categories, but agreed to by the employer and employee. HRS/TND Associates, Inc.

50. On the Horizon: • Family Friendly Workplace Act reintroduced in the House: would allow employers to offer employees the option of receiving paid time off in lieu of cash wages for overtime hours worked HRS/TND Associates, Inc.