Your business: Managing the risk of employee claims

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Managing people in the workplace can be risky business. Even in the best employment environments, there are opportunities for an employee to become disgruntled. Seemingly insignificant mistakes made by a manager can lead to a charge or lawsuit resulting in financial losses for your company.

You can mitigate the risk to your business by purchasing employment practices liability insurance (EPLI).

According to the U.S. Equal Employment Opportunity Commission (EEOC) website, claims filed with the EEOC (the government agency that enforces federal employment discrimination laws) increased by 18 percent in just the past 10 years. The basis for the claims span a variety of issues, including discrimination based on race, gender, age and disability.

Your actions and motivation are subject to scrutiny throughout the entire employment process, from recruiting to termination and beyond. Decisions made in the past may be re-examined as state and federal laws change, and challenges to your decisions can be made months and sometimes years later.

Even if you have done everything right, the cost of defending against an employee claim can be prohibitive. While the damages recoverable vary, employers can be required to pay damages for back pay, front pay, other economic losses and mental anguish.

It is always advisable to consult with an attorney when developing employment applications, employee handbooks and other materials, and when making employment decisions. But even that does not prevent an employee who feels he or she was wronged from filing a grievance.

Fortunately, that’s where EPLI coverage fits in. This coverage provides a limit of insurance, separate from the standard commercial policy, which covers your business operations against many actual or alleged wrongful acts that may have been committed. The types and amounts of EPLI coverage that can apply   ̶  including co-pay percentages, limits and deductibles   ̶  can vary widely.

That’s why it’s important to assess your situation, consult with your attorney and speak to an independent agent who can tailor coverage to fit your needs. In many cases, your insurer can also provide welcome information about employer best practices and sample employee policies or other loss prevention assistance.

We specialize in employee benefits, and can guide you through your coverage needs. Give Dave a call with any questions, at 303-834-1001.

Submitted by Cincinnati Insurance 

Affordable Care Act: 90-Day Waiting Period Limitations and Technical Amendments

March 2014 – The U.S. Department of Labor (DOL), Treasury, and Health and Human Services recently published final regulations for the implementation of a 90-day limit on waiting periods for employee health coverage. The full DOL News Release can be found here.

We’ve created a brief summary of these new guidelines to help you understand the changes and who they affect:  

Who: Employers, as they prepare to comply with group health plan mandates

What:

• Clarification of the definition of a “waiting period,” and what individuals are eligible
• The law prevents a waiting period that exceeds 90 days after an employee becomes eligible for health coverage (employers may choose a shorter waiting period, or no waiting period)

When: 2014 Group Health Plan renewal periods

Some key provisions of the new regulations include:

Waiting Period:  “A period that must pass before coverage for an employee or dependent that is otherwise eligible to enroll under the terms of a group health plan can become effective.” Being considered “otherwise eligible” to enroll in a plan means having met the plan’s substantive eligibility conditions. These conditions include being in an eligible job classification, achieving licensure requirements specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period.

Bona-Fide Employment-Based Orientation:  The final regulations do not address the duration an employer may use for a “reasonable or bona fide” orientation period. However, proposed regulations have been introduced limiting this timeframe to one month. The measurement of a month seems to be convoluted, but we expect this rule to stick with a 30-day limitation. 

Cumulative Hours-of-Service:  Plan Sponsors can make eligibility contingent upon a 1,200-hour-cumulative-hours-of-service rule. This means an employee must first meet the specific number of cumulative hours set within Plan Documents before their waiting period begins (which may not exceed 90 days, as outlined above).   

Certificate of Coverage (COC):  Carriers and Plan Sponsors will be required to provide COCs to terminated employees through December 31, 2014. This applies to all plans, because some plans may not be subject to the pre-existing conditions rule in 2014, based on the group plan renewal date.

Potential Landmines:  Language within the guidance reads: “Eligibility Conditions based solely on the lapse of a time period are not permissible beyond 90 days. Other conditions of eligibility under a group health plan are generally allowed, unless the condition is designed to avoid compliance with the 90-day waiting period limitation.” In order to illustrate that an employer is not implementing any of the aforementioned “Substantive Eligibility Conditions” strictly to avoid the 90-day waiting period limitation, it would be a wise decision for employers to use these rules for ALL employment related benefits, such as vacation accrual, PTO, and 401k plan participation.

When these rules become effective, (upon 2014 plan renewal) any employee wait period cannot exceed 90 days, even if it began prior to the employer’s 2014 plan renewal. 

For questions related to your renewal or how these requirements affect your heath coverage offerings, contact me.