A new year brings new employment laws and regulations for employers, and 2018 is no exception for California. A variety of measures were passed on both the State and local levels that will take effect on January 1.
In an effort to make health coverage more affordable and accessible, the Affordable Care Act (ACA) implemented parameters to the premium rating methodologies used by insurers in the individual and small group markets. Insurers in these markets can vary premium based on age so long as the insurers adhere to the proper age band rating procedure. This procedure has remained unchanged since 2014, but pursuant to a rule issued by the Department of Health and Human Services (HHS), the rating methodology will change come 2018.
An opt-out arrangement offered as part of a group health plan can provide significant advantages to employers. Through such an arrangement, employees who have alternative sources of coverage are incentivized to forego participation in the employer plan. In exchange for the waiver, the employee receives a (taxable) payment. However, recent developments - both regulatory and judicial - may undermine the effectiveness of opt-out arrangements in certain circumstances.
In September 2016, the Equal Employment Opportunity Commission (EEOC) released a new version of the EEO-1 reporting form. The new form, which would require employers to supply employee pay and hours data, was to go into effect in March 2018 for reporting year 2017. The EEOC indicated that the inclusion of pay data would facilitate the agency’s investigations into gender, race, and ethnicity pay discrimination.
In April 2016, San Francisco Board of Supervisors passed the Paid Parental Leave Ordinance (PPL) - the first local mandate in the nation to require fully paid parental leave for new parents. Under PPL, covered employers are required to provide supplemental income to eligible employees who take parental leave and receive Paid Family Leave (PFL) benefits through the State. PPL took effect January 1 of this year, but its application is phased-in over the course of the year.
Update as of July 21, 2017: Under the leadership of new Secretary of Labor Alex Acosta, the Department of Labor signaled last month that it will drop its defense of the new overtime rule.
On June 5, the U.S. Supreme Court (the Court) issued a unanimous decision in the case of Advocate Health Care Network et al. v. Stapelton et al. that expands the ERISA exemption for church plans to include plans established by church-affiliated organizations. The decision is a departure from prior “plain text” judicial readings of the exemption, but it aligns with the interpretations of other federal agencies.
The PCORI Fee Applies to Health Insurance Issuers and Self-funded Health Plans
Under the Affordable Care Act, health insurance issuers and self-funded health plans are required to pay an annual Patient-Centered Outcomes Research Institute Fee (PCORI), set to expire in 2019. Because health insurance issuers are subject to this fee, the sponsor of a fully-insured health plan does not need to take any action. However, sponsors of self-funded health plans (including level-funded arrangements) are obligated to comply. Payment of the PCORI fee must be submitted to the IRS by July 31 of the year following the last day of the plan year. This year, payment is due no later than Monday, July 31, 2017