Health FSAs, HSAs, and HRAs

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WELCOME
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Employment Litigation Update

• Presented by Maureen P. Kelly

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Employment Litigation Update

• Mandatory ADR W.D. of PA
• Case Filing Trends W.D. of PA
• Amount in Controversy Changes State Court
• Recent Decisions

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Mandatory ADR Program - W.D. PA

• Mandates use of ADR in all civil cases (except
  social security prisoners)
• Effective June 1, 2006
• Pilot program four judges
• Chief Judge Ambrose
• Judge Cercone
• Judge Hardiman
• Judge Schwab

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ADR Program Methods

• Mediation
• Early neutral evaluation
• Arbitration

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ADR Process Overview

• Case filed.
• Local Rule 26(f) meet confer to determine ADR
  process.
• Initial case management conference.
• Court refers to ADR.
• Neutral chosen by parties.
• ADR occurs. Neutral files ADR report.
• Settled or proceeds with discovery.

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ADR Program Information

• www.pawd.uscourts.gov

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Case Filing Trends W.D. of PA
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Employment Litigation Caseload W.D. of PA
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Amount in Controversy Changes State Court

• House bill 750 signed by Governor Rendell as Act
  41 on May 11, 2006
• Amends Section 7361 of Title 42
• To 50,000 in first, second, or third class
  counties

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Recent Decisions
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Health FSAs, HSAs, and HRAs

• Presented by David J. Laurent

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Health FSAs, HSAs, and HRAs

• Health Flexible Spending Accounts (Health
  FSAs), Health Savings Accounts (HSAs), and
  Health Reimbursement Accounts (HRAs) are means
  by which employees can pay for various medical
  expenses with pre-tax dollars.

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Health FSA

• A Health FSA is generally part of a cafeteria
  plan that permits employees to choose among a
  variety of employee benefits. Health FSAs permit
  employees and/or employers to contribute to an
  account on a pre-tax basis, which then can be
  used to reimburse the employee for certain
  medical expenses. The IRS has defined the items
  for which the Health FSA can reimburse an
  employee. The list is very broad, and includes,
  among other things, the following
• Deductibles
• Co-payments
• Co-insurance
• Medical expenses beyond the limits imposed by a
  medical plan
• Contact lens solutions
• Tylenol

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Health FSA

• Health FSAs do not, by law, have minimums or
  caps, but most employers impose some minimum
  level of participation and some maximum level of
  participation. Additionally, once an employee
  has authorized an annual deduction to a Health
  FSAs, the full amount of that deduction is
  immediately available to the employee, even
  before the employee actually has contributed that
  amount to his account. At the same time, if the
  employee fails to use any amount in his account
  by the end of they year, he forfeits the balance
  to the plan. Thus, a use it or lose it rule
  applies to Health FSAs.

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HSAs

• HSAs are similar to Health FSAs in the sense that
  the employer establishes an account to which the
  employer and/or the employee contribute, which
  account then can be used to reimburse the
  employee for certain medical expenses. However,
  HSAs differ from Heath FSA in the following key
  respects
• They are available only if the employer offers a
  high deductible medical plan, i.e., one that
  includes a deductible of at least 1,000 for an
  individual and 2,000 for a family, and a maximum
  out of pocket cost of 5,100 for an individual
  and 10,200 for a family and
• There are limits on the amount that can be
  contributed by or on behalf of the employee.

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HRAs

• HRAs are similar to Health FSAs and HSAs in that
  the employer establishes an account to which the
  employer and/or the employee contribute, which
  account then can be used to reimburse the
  employee for certain medical expenses. However,
  HSAs differ from Heath FSA in the following key
  respects
• The employer alone must fund an HRA
• There are no limits on the amount that can be
  contributed.
• The amount in an employees HRA can be rolled
  over to the next year and/or to a new employers
  plan.

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Top Ten HR Policy Tips to Keep You Out of Legal
Trouble

• Presented by Sally Griffith Cimini, Esq.

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1 Employment at Will

• Can quit or be terminated at any time, for any
  reason, with or without notice
• Policies can be changed without notice
• Dont use contradictory language in other
  provisions or letters

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2 Improper Deductions

• Provide complaint procedure for improper
  deductions from wages
• Assure that improper deductions will be corrected
  Safe Harbor
• Assure intent to comply with FLSA

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3 Overtime

• Cannot refuse to pay overtime if not approved in
  advance
• Only recourse is discipline
• Must pay non-exempt employees for OT worked in a
  40 hour workweek at a rate of 1 1/12
• Salaried does not
• equal exempt

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4 Computer Use

• Remind employees that the software and hardware
  belongs to the company
• Remind employees that they have no expectation of
  privacy in e-mail and voice-mail messages
• Advise that you may (but not will) monitor
  computer use

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5 Workplace Harassment

• Make sure your policy covers all types of
  workplace harassment, not just sexual harassment
• Periodically train employees
• Dont ignore complaints
• Remember off-site,
• temporary, leased
• and contract
• workers

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6 Cell Phone Usage

• Particularly important where employees use phones
  in connection with work
• Must use hands-free device when driving
• Must obey traffic laws
• Limit personal phone
• use at work

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7 Accrued Paid Time Off

• Specific how to accrue PTO, vacation, personal
  and sick days, etc.
• Once accrued, must pay under PA Wage Payment
  Collection Law
• Use or lose must be specific
• Remember FLSA salary basis test

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8 Confidentiality

• Describe types of confidential information and
  duty to keep secret both during and following
  departure from employment
• Take practical internal steps to keep information
  confidential
• Consider having a
• separate agreement

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9 Legally Required Policies

• Equal Employment Opportunity
• Workplace Harassment
• Family Medical Leave Act
• USERRA/PA Military Leave
• PA Wage Payment Collection Law (pay dates,
  method, etc.)
• Drug-Free Workplace
• Only applicable to certain employers

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10 Acknowledgement Page

• Restates employment at-will relationship
• Acknowledges receipt and requirement to review
• Helpful in UC proceedings

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Bonus Tip Know What Not to Include

• Probationary period policy and other collective
  bargaining agreement holdovers
• Promises you cant (or wont) keep or
• that dont give wiggle room
• Inconsistent/outdated language (particularly
  regarding benefits entitlement for certain
  employees)
• Too many policies!

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Bonus Tip Periodically Conduct
an HR Audit

• Review
• Applications
• Offer letters
• Postings
• HR policies procedures
• Exempt/non-exempt status
• Ensure compliance with current laws, regulations
  and judicial precedent

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Questions