Applying the federal COBRA subsidy to Ohio’s Mini-COBRA law

As I’ve previously reported, the federal stimulus bill, enacted last month, requires employers to provide a 65% subsidy of COBRA premiums for employees involuntarily separated. As I’ve also previously reported, Ohio has its own “mini-COBRA” for small employers with between 10 and 19 employees.

Do not assume, however, that merely because COBRA does not apply to small businesses that the subsidy also does not apply to small businesses. The federal stimulus bill specifically provides for COBRA premium assistance to former employees covered under state continuation coverage law such as Ohio’s mini-COBRA.

Just like its federal counterpart, small employers covered by Ohio’s mini-COBRA are not obligated to pay any portion of the premium. The former employee will pay 35% of the premium and employer will claim the payroll tax credit from the IRS for the 65% of the premium not paid by the former employee.

There are, however, three key differences between the subsidy under COBRA versus Ohio’s mini-COBRA.

1. Although the federal subsidy lasts for 9 months, Ohio continuation coverage, and therefore the subsidy obligation, only extends for 6 months.

2. To be eligible for the subsidy under COBRA, an employee need only have been involuntarily terminated for a reason other than gross misconduct. To be eligible for the subsidy under Ohio’s mini-COBRA, the employee must have been involuntarily terminated and: (i) continuously insured for the 3 months prior to the termination; (ii) eligible for unemployment; and (iii) not covered or eligible for Medicare or any other group health coverage.

3. Under COBRA, the federal subsidy is retroactive to September 1, 2008. In comparison, Ohio’s mini-COBRA only covers terminations that occur on or after February 17, 2009. Both subsidies expire at the end of this year.

The Ohio Department of Insurance has published a model COBRA notice for small employers to use.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Department of Labor to step up enforcement; employers should step up self-audits

You may have noticed that I write a lot about wage and hour issues. I do so because it’s an issue that often gets even well-intentioned businesses into trouble. As if employers don’t already have it bad enough with the explosion of wage and hour class action litigation, this week brings us news that new Labor Secretary Hilda Solis promises to “reinvigorate the work” of the DOL’s Wage & Hour Division. Her quote comes in response to an investigation by the General Accounting Office, which reports that the Wage & Hour Division has mishandled hundreds of cases.

In yesterday’s New York Times, Steven Greenhouse reports:

The report pointed to a cavalier attitude by many Wage and Hour Division investigators, saying they often dropped cases when employers did not return calls and sometimes told complaining workers that they should file lawsuits, an often expensive and arduous process, especially for low-wage workers.

In light of the DOL’s planned stepped-up enforcement, employers must be extra vigilant in uncovering wage and hour violation in their own workplaces. A wage and hour audit feels like an unpleasant medical exam. The investigator is not necessarily limited to the alleged violation, and will turn your workplace upside-down, pouring through years of records and privately interviewing your employees. And, once you are on their radar, it is hard to get off. In other words, they’ll be back to make sure you are staying on the path of all that is right and just.

For employers, the best advice I can give is to get out ahead of this issue. Take a hard look at all of your current wage and hour issues: employee classifications, meal and rest breaks, off-the-clock issues, and child any workers. Make sure you are 100% compliant with all state and federal wage and hour laws. If you are not sure, bring in an attorney to check for you. If you are ever investigated by the DOL or sued in a wage and hour case, it will be the best money your business has ever spent.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? Pay for employee training time

Do you know? Lost of opportunities exist for employees to train, take educational classes, or otherwise better themselves – inside classes, outside classes, seminars, lectures, and continuing education requirements, to name a few. Whether attendance at these activities counts as “working time” under the Fair Labor Standards Act depends on four factors:

1. Is attendance outside of the employee’s regular working hours?
2. Is attendance truly voluntary?
3. Is the course, lecture, or meeting indirectly related or unrelated to the employee’s job?
4. Does the employee not perform any productive work during such
   attendance?

You must be able to answer “yes” to all four of these questions to consider an employee’s attendance non-working time.

For non-exempt employees, this determination is important for two reasons. First, working time must be paid at the employee’s regular rate. Secondly, it counts towards the number of hours worked in a work week for determining overtime eligibility.

This issue is even more important in today’s tight economy. Failing to consider these factors before requiring or suggesting training or education for employees could result in the added expense of unbudgeted wages and overtime.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Make every day “Associate Appreciation Day” to avoid unions

Wal-Mart has labeled today “Associate Celebration Day,” in honor of its announcement of $2 billion in financial bonuses and other awards to its hourly employees. USA Today has the details.

It should not come as a surprise that Wal-Mart, which fights union organizing as hard or harder than any other American employer, is against the Employee Free Choice Act. My cynical side cannot help but think that Associate Celebration Day is a subtle reminder to potential union members that Wal-Mart is a good place to work and takes care of its own.

Keeping a place of employment union-free is not a one-shot deal. I do not think that employees’ choice to unionize can be bought and sold with one-off bonuses and merchandise discounts. To stay union-free, employers should make every day Associate Celebration Day. To be prepared for the EFCA if it becomes law, companies should actively strive to be workplaces of choice for employees and not workplaces of opportunity for labor unions.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #71

The big news of the week is the continued fallout from AIG’s bonus payments. Since Connecticut law governs the legality of whether AIG was required to make the payments under its retention plan, there is no better place to look for information on this issue than our good friend Dan Schwartz at the Connecticut Employment Law Blog.

In other economic news, Jay Shepherd at Gruntled Employees shares his thoughts on the CEO of a Boston hospital, who looked to his employees for ideas on how to save money and jobs.

The Business of Management gives some advice on how to properly handle layoffs.

Maribeth Minella at the Delaware Employment Law Blog has the top 10 layoff tips for employers. Tip #7 is the most important: “Seek the advice of legal counsel early.” We can then help guide you through the other 9.

Northeast Ohio’s Employers Resource Council’s Where Great Workplaces Start presents a timely list of some key HR terms.

Bob Sutton gives his ideas on the importance of quality in a business plan.

David Yamada at Minding the Workplace compares ethical employment practices to sweeping problems under the rug.

The Word on Employment Law with John Phillips opines that an employer is entirely within its rights to fire an employee who posts something on the Internet that negatively reflects on the job. Case in point: Employee disloyalty and Facebook.

We end this week’s review with a trio of posts on the Employee Free Choice Act:

• Michael Fox at Jottings By An Employer’s Lawyer points out the biggest mistake each side is making in the debate over the EFCA.

• LaborPains reports on some recent polling numbers that suggest that the EFCA might be gaining traction.

• Kris Dunn, The HR Capitalist, tries to untangle the spin coming from the labor unions about this bill.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Odd employees have a place – just maybe not in your workplace

I spent my summer between high school and college unloading trucks in a fabric warehouse. During my first week of work, one of my co-workers asked me if “Harlan” had gotten to me yet. As it turned out, Harlan was the warehouse joke. He held some strange ideas, and would take a stab at indoctrinating each new employee. Sure enough, later that same day Harlan cornered me and let me in on his view of the world – that a small cluster of Freemasons ruled the world from a secret office on the 36th floor of Rockefeller Center, that Lee Iacocca saved Chrysler by making a pact with Satan, and that the Israeli government would start the apocalypse by 2004.

I hadn’t thought about Harlan in years, but was reminded of him a few days ago when I came across Lizalek v. Invivio Corp. (7th Cir. 3/16/09):

Gary Lizalek’s religious beliefs make for a complicated identity. As a matter of faith, he understands himself to be three separate beings: (1) GARY C LIZALEK, “a trust that was created by the Social Security Administration … to generate assets for its beneficiary, the United States Government”; (2) Gary C. Lizalek, Trustee; and (3) Gary C. Lizalek, Steward, who “lends … consciousness and physical abilities to said Trust.” His employer asked that he stick with a single identity for professional purposes, but Lizalek refused. Shortly thereafter he was terminated. The district court held that this decision broke no law, and we affirm.

I could profoundly write about how a diligent background check could have revealed this employee’s oddities before he was hired, or about Title VII’s obligations to reasonably accommodate sincerely held religious beliefs unless it poses an undue hardship.

Instead, I’ll simply leave you with this thought. Most workplaces have someone like this employee. It’s up to you to figure out if this type of personality is the right fit for your business. Invivio hired him to deal with customers, and felt uncomfortable with him having that role in light of his bizarre behavior. Harlan was cutting fabric in a warehouse, and management did not mind his weird worldview, even if it sometimes distracted his co-workers. Every employee won’t be the right fit for every job; it’s management’s prerogative to weed out those employees that aren’t the right match for the particular business or position.

[Hat tip: Daily Developments in EEO Law]

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

New COBRA notices now available

Sometimes information just moves quickly to keep up with. The Department of Labor has just published the new COBRA notices, making my post of just a couple of house ago now partly obsolete. The notices are available here, from the DOL’s website.

Thanks to Michael Moore from the Pennsylvania Labor & Employment Blog, who saw my post from this earlier this morning and gave me the heads up.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.