ow to develop an effective Employee Benefits/Health and Welfare Program H

Volume VII, No. 4 July - August 2010
How to develop an effective
Employee Benefits/Health
and Welfare Program
By Paul Essner, CFP®, CLU, ChFC
Paul Essner, CFP®, CLU, ChFC is partner at The Signature Group of Companies and the Associate/Allied Member of the
HCP Board of Directors. He has 20 years of experience representing home care and health care clients, addressing their
employee benefit, pension and insurance needs. The Signature Group of Companies is a full-service insurance and financial
services firm based on Long Island serving companies and individuals throughout the region. He can be reached at
516.336.5950 or pessner@tsgfin.com.
I
In this issue:
US Dept. of Labor’s “We
Can Help” Campaign
5
Associates’ Corner:
Home Care Software
Solutions/HHAeXchange
6
Industry Wage & Hour
Litigation After “Coke”
7
t will come as no surprise to any business owner or high-level manager,
especially within home care, that the world is changing rapidly. The
challenge of providing an effective and cost-efficient employee benefits
program is especially critical now, as the compliance requirements of
PPACA (the acronym for health care reform) are codified. However, in
the simplest terms, we are business owners – our current and future
employees will evaluate our work environment and opportunity through
the provision of an employee benefit program. How do you develop an
efficient and effective strategy?
The most important aspect of a program is COMMUNICATION – how do
you explain the mechanics of the program? Having Human Resources
(HR) personnel and your outside consultants available to employees
will serve to remove the mystery, which too often promotes the
assumption that the company is reducing the quality of the program.
Often, change is more of a philosophical shift in strategy.
Continued on Page 2
Tools
Home care. Health care. Your care . . . for life.®
for the
Trade, July/August 2010
Page How To Develop an Effective Employee Benefits Program...
Continued from Page 1
Furthermore, there is a hierarchy of benefit offerings based upon the expectation of employees. In general, this
is the desired order:
1. Health Insurance
2. Retirement Planning – 401(k), SIMPLE, Profit Sharing, et.al.
3. Ancillary Offerings – Employer Funded
4. Ancillary Offerings – Employee Voluntary
With a quality communication strategy as a baseline, there are important steps to consider:
Know your population – Other than field employees, where coverage needs are often dictated by mandate (living wage) or collective bargaining, understanding your population is important.
• Are they amenable to a network-only health insurer?
• Are they flexible enough to learn the benefits of a Health Savings Account (HSA) or Health Reimbursement Account (HRA)?
• Will most require coverage for dependents?
• Do they have the financial flexibility to contribute to programs, such as 401(k) or Dental?
Understand the market – For all programs, there are many vendors available from which to purchase programs. How do you market?
• Direct Marketing – with the Internet, you now have the ability to do your own research. You need to
consider, however, the cost/benefit. What, if anything, will you save from eliminating a broker or
consultant from the process? What new responsibilities will you have?
• Broker/Consultant – In the spirit of full disclosure, we believe that this is the most effective means of
marketing your programs. Selecting a broker/consultant is challenging:
• What size companies do they typically service?
• Do they have a client specialization (i.e., home care or health care)?
• Do they have conflicts of interest (i.e., commitments to certain providers that may sway their opinion or are they completely independent)?
• How detailed is their RFP process?
• How will they support your COMMUNICATION strategy?
• Will you have a dedicated service staff, or be forced to contact the provider directly with questions?
• How are they compensated?
Seek creativity
•
Provide a consolidated benefit statement to employees showing them the value of what you
are contributing to coverage. Interestingly,
beginning in 2011 PPACA will require disclosure
of employer contribution to health insurance
on the W-2. This is likely to facilitate disclosure of
an employee receiving coverage and allow for “affordability testing” as mandated in 2014.
Continued on Page 3
Tools
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Page How To Develop an Effective Employee Benefits Program...
Continued from Page 2
• Offer low-cost employer sponsored or voluntary programs to create a robust package. Examples include:
• Group Life Insurance – a low cost, high impact benefit
• Voluntary Disability/Critical Illness programs – made popular by the talking duck, there are many high-quality, low cost vendors providing these programs.
• Vision Coverage – whether your employees wear glasses or contact lenses, or simply wish to have an
annual exam, these programs can be offered both on a voluntary and employer-paid basis for under
$10 per month, per enrollee.
• Offer incentives for employees to attend enrollments – some companies do raffles or door prizes.
Often, the provider will supply the giveaways.
Retirement planning is typically challenging in home health care. 401(k)s, for example, limit the ability of Highly
Compensated Employees, as defined by the IRS, to make contributions. So, to be succinct, unless your full time
field and administrative employees are willing to participate, the opportunity to provide the benefit to executives
becomes limited. How do you address this ongoing problem? Here are some solutions:
• Provide an incentive, in the form of a match or employer contribution. This can, however, get expensive
if not handled properly.
• Understand who you can remove from the plan without being discriminatory (i.e., collectively bargained employees)
• Implement a separate deferred compensation program for highly compensated employees. This addresses
two areas – it may allow you to remove certain classes of employees from the plan altogether (reducing
cost and responsibility) and permits you to design a unique, custom-tailored benefit for this special group.
Continued on Page 4
WILLCARE Seeks Director of Sales
WILLCARE, a regional leader in the home health care industry, seeks an energetic, entrepreneurial individual
to direct and coordinate its sales operations across all regions in New York, Ohio, and Connecticut.
Responsibilities include market analysis, developing market-based sales strategy, goals and plans, and
evaluating results and effectiveness of sales activity. The Director of Sales will mentor and coach sales staff in
all regions on sales calls, support business development activities, and help establish strong relationships with
new and existing referral sources. He/she will also develop sales training programs and materials, and orient
new sales staff.
Experience/qualifications include:
• Bachelor’s degree.
• 5+ years home care or related health care sales experience.
• 3+ years experience managing sales and marketing professionals in multi-state environment.
• Demonstrated success establishing relationships, managing a book of business and increasing
referrals and revenue.
• Knowledge and understanding of Medicare rules for home care is highly desirable.
• Experience developing sales training and mentoring tools.
• Prior experience conducting market analysis and strategic planning.
• Ability to travel 60-75%.
Qualified candidates should send resume to NEvans@willcare.com.
Tools
for the
Trade, July/August 2010
www.willcare.com
Page How To Develop an Effective Employee Benefits Program...
Continued from Page 3
One of the more interesting concepts for mixing retirement and employee incentive is the creation of an ESOP
(Employee Stock Ownership Plan). The structure of the ESOP, in its essence, is for an employer to “sell” an interest
(whole or part) in the business to the employees through the use of this program. While the employer has the
opportunity to “take money off the table” by selling interest in the business, they can still maintain control. There
is a significant tax incentive to the business owner, while the employees enjoy the pride of ownership. Whether it
impacts productivity and profitability is a reasonable question from an employee benefit perspective. This is also a
highly technical and specialized process, starting with a detailed needs analysis and financial review.
Technology, in 2010, has had a remarkable impact on benefit implementation, service and management. Where
once you had to wait for claim adjudication or updated account balances only by mail, you now have real-time
access to progress and planning. One way to judge providers is their commitment to technology and the pressure
it removes from Human Resource staff in making programs self-service. Again, the ability to train employees,
especially Generation X and Y, to be self-sufficient may be an important element in the success of a program.
In the final analysis, the development of an effective Employee Benefits program is based upon the employer’s
ability to address the emerging needs and demands of the labor marketplace, coupled with the challenge of
tightening budgets and regulatory constraints. As mentioned earlier, communication is the key to the success, just
as lack of communication is often the key to failure. While most offerings, in their essence are old, new technologies
can help liven the programs and employees view of the impact on their lives and that of their families.
Just consider the words of Thomas Edison, ”Good fortune is what happens when opportunity meets with planning.”
While Mr. Edison may have been referring to his latest invention, the axiom is well-applied to the development
of an effective benefits program for employees. TT
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Tools
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Trade, July/August 2010
Page The U.S. Department of Labor’s
“We Can Help” Campaign: Are
more Lawsuits coming your way?
By Alan B. Pearl, Esq.
Alan B. Pearl is Chief Operating Officer and General Counsel at Portnoy, Messinger, Pearl & Associates, Inc.
(PMP), www.pmpHR.com, a full service human resources and labor relations consulting firm. He can be reached
at abpearl@pmpHR.com or 516.921.3400.
a
re you sure that you have correctly categorized your exempt and non-exempt employees? Are you running
afoul of U.S. Department of Labor (DOL) overtime rules? When was the last time you conducted a pay equity
analysis? These areas will become the focus of more audits than ever before, given the new “We Can Help”
campaign that was recently launched by DOL.
Secretary of Labor, Hilda L. Solis, launched the Department of Labor’s “We can Help” Campaign on April 2, 2010.
In her speech, Ms. Solis told the audience that the Department of Labor is focused on protecting every working
man and woman in America who has been taken advantage of, but has been to afraid to come forward. The
DOL has added more than 250 new field investigators nationwide to help with this effort. Through the use of
Spanish/English bilingual public service announcements and the launch of a new Web site, DOL is renewing its
emphasis on reaching workers, regardless of immigration status, who may be denied the pay legally guaranteed
by law.
The number of small businesses facing similar suits has exploded since 2004, when the U.S. Department of Labor
revised the Fair Labor Standards Act (FLSA) to clarify which workers are exempt from overtime laws. In doing so,
it boosted the number of protected employees. In 2006 the Department collected $172 million in back wages
from employers - up 3.6 percent over its take in 2005. In 2007, DOL announced judgments and settlements in
the millions against small businesses, which often have more exposure because they lack in-house legal teams or
HR departments. A New Orleans security company was assessed $185,385. A small oil-and-gas outfit in Houston
owes $1.1 million. A Las Vegas construction firm owes $1.2 million.
Are you confident that your records can pass the audit? Many employers have not been proactive in keeping up
with the FLSA changes and have their employees improperly classified. Or, they may be classifying workers as
“Independent Contractors” when, in fact, they are employees. Yes, time and budget must be allocated in order
to get this accomplished, but it will be far less than what it may cost once the Department of Labor is at your
door. Start this important audit today! TT
Tools
for the
Trade, July/August 2010
Page Associates’
Corner
Homecare Software Solutions
David Birnbaum is Executive Vice President of Business Development for Homecare Software
Solutions/HHA eXchange. In addition to running business development, David also actively
participates in product development and operations for HHA eXchange. Prior to his current role,
David was involved in senior living development projects and a rehabilitation hospital conversion.
David has also served as Vice President at BNY Mellon’s Office of Innovation, Vice President
of Operations of the venture capital fund Softbank Emerging Markets, and as a consultant for
PricewaterhouseCoopers. David holds a Bachelor of Arts from Temple University in Philadelphia
and a Master of International Affairs from Columbia University in New York.
How did Homecare Software Solutions get started in home care?
About six years ago we built a platform to help Certified Home Health Agencies (CHHAs) and Long Term Home
Health Care Programs (LTHHCPs) in New York State manage their subcontracted licensed agencies. The manual process
of faxes, phones calls and emails made it difficult for CHHAs to manage their large numbers of cases with multiple
licensed agencies. We developed HHA eXchange, an online network that allowed CHHAs and LTHHCPs to enter new
cases into the system and have all the case information displayed on the screens of one or more of their subcontracted
licensed agencies. Once assigned, the CHHA and the licensed agency could quickly and easily exchange information
about the case which improved the overall case management. Ours was the first commercial system of its kind.
What was your next stage of growth?
Whenever we contracted with a CHHA, they signed up their licensed agencies—sometimes 15, 30, 50 or more
at a time—and these agencies then became our clients. As we added more and more licensed agencies, we
recognized that they had unique needs of their own, so we transformed our product to help them manage
their operations more effectively. We built a full suite of features such as scheduling, time & attendance/
telephony, reports and HR compliance. That’s what we’ve been doing these past few years—building a
comprehensive, detailed set of tools for licensed agencies in New York.
What is your client mix today?
We have about 100 clients—all in New York State. Just over 85% are licensed agencies and the rest are
CHHAs and LTHHCPs.
What is your company’s business approach?
Our focus is squarely on the areas of Medicaid, Private Pay, including Private Duty Nursing, and insurance. We
pride ourselves on three things: the first is innovation. We just released version 5.3 of HHA eXchange that,
among other things, includes a new map feature that our clients really like that shows where caregivers and
patients are geographically. The second is strength in compliance—especially in the highly regulated environment
of New York State. Third is user-friendliness—our system is really very easy to use and that’s important to us.
What does the future hold for HHA eXchange?
On the product side, we are building a new skilled
module that includes a full suite of features such
as doctor’s order/485 forms and a medications
database. We are also building a new marketing
module with an integrated customer relationship
management (CRM) module. Additionally, we are
looking to expand into New Jersey and Pennsylvania,
and will develop our products from the ground up
based on the specific situations and regulations with
Medicaid in each state, the same way we built our
products in New York State.
Tools
for the
Trade, July/August 2010
Associates’ Corner, a regular feature of Tools
For The Trade, highlights a particular HCP
Associate Member.
Page INDUSTRY WAGE & HOUR
LITIGATION AND COMPLIANCE
AFTER “COKE”: JUDICIAL &
LEGISLATIVE RESPONSES
By Paul J. Siegel, Esq., Ana C. Shields, Esq. and Noel P. Tripp, Esq.
In a decision now-famous in the industry, in 2007 the United States Supreme Court ruled that
home health aides and other companions employed by third parties are not eligible for overtime
compensation under the Fair Labor Standards Act (FLSA), the primary Federal statute governing
minimum wage and overtime compensation. Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158
(2007). Coke upheld a longstanding industry belief regarding the breadth of the “companionship
exemption,” but is not a panacea for all wage compliance issues under Federal and – importantly
– state law. In this article we note several of the ways in which plaintiffs have attempted or may
attempt to bring wage claims against industry employers under the FLSA and state laws.
LAWSUITS ATTACKING “COKE” ON ITS FLANKS
Coke has not signaled a cease fire with respect to FLSA
lawsuits, a popular tool for plaintiffs’ attorneys seeking to
bring class or “collective actions” in behalf of aides and
“similarly situated” employees. Plaintiffs continue to attempt
to distinguish their own employment from Ms. Coke’s,
claiming, for example, that they are not “companions” or
that they do not work in a “private home.”
The Court disagreed, relying on a DOL opinion letter
from 1995 (12 years before Coke was decided) which
stated that “such activities as cleaning the patient’s
bedroom, bathroom or kitchen, picking up groceries,
medicine, and dry cleaning would be related to personal
care of the patient and would be the type of household
work that would be exempt.”
Companionship Services vs. General Household Work
A similar tactic was tried and rejected in Stubbs v.
A-1 Nursing Care of Cleveland, Inc., 2009 U.S. Dist.
LEXIS 57759 (N.D. Ohio July 8, 2009), where the
Court observed that the home aide complaint “only
states that she was responsible for in-home feeding,
bathing, and caring, among other things,” and thus did
“not allege facts sufficient to infer that greater than
twenty percent of her hours were devoted to general
household work” – the standard necessary to evade
the exemption enunciated in Coke.
For example, in Torres v. Ridgewood Bushwick Senior
Citizens Homecare Council, Inc., 2009 U.S. Dist. LEXIS
33622 (E.D.N.Y. Apr. 22, 2009), plaintiff home aides
sued for overtime alleging that they spent 50% of their
time performing “general household work,” rendering
them ineligible for the companionship exemption under
Department of Labor (DOL) regulations and Coke.
Specifically, they claimed that they spent substantially
all of their time “(1) cleaning the client’s house, (2)
preparing meals and cooking, (3) bathing the patient,
(4) doing laundry, (5) running errands for the patient,
and (6) making and changing the bed” and that patient
bathing, general housekeeping and errand running
were not companionship services.
Tools
for the
Trade, July/August 2010
In Anglin v. Maxim Healthcare Servs., 2009 U.S. Dist.
LEXIS 70155 (M.D. Fla. July 22, 2009), a “Certified
Home Health Aide” sought overtime under the theory
enunciated in Torres and Stubbs, claiming to spend more
than 20% of her time on “general household” work.
Continued on Page 8
Page Industry Wage & Hour Litigation After “Coke”
Continued from Page 7
In Anglin, the judge held that a trial needed to
be conducted to resolve plaintiff’s claim that she
performed numerous tasks not associated with her
care of Maxim’s patients, including: “daily laundry;
daily cooking; daily washing dishes; the heavy cleaning
(dusting/vacuuming/mopping) of the patient’s entire
house 2-3 times per week, including those portions
which the patient never frequented; taking patient’s
family members to the (non-patient) family member’s
doctor’s appointments; shopping for the entire
household, including separate lists in many cases for
non-patient members of the household one to two
times per week; daily making the bed of everyone in
the patient’s household; changing the linens on the
bed of everyone in the patient’s household; taking the
entire household’s trash out one to two times per week;
painting portions of a patient’s home; and feeding and
cleaning up after the household pets.”
The Court noted that the fact that the two patients
to whom Anglin rendered services lived with elderly
parents bolstered plaintiff’s contention that she cared
for individuals other than the patients themselves.
Private Home Requirement
While Coke clarified that the FLSA companionship
exemption applies where the person being cared for
makes payment for the companionship services to a
third party (such as an agency), it left undisturbed the
DOL requirement that such services be provided in a
“private home.” Chacon v. El Milagro Child Care Ctr.,
2009 U.S. Dist. LEXIS 58444 (S.D. Fla. July 9, 2009).
In Chacon, the Court ordered a trial to determine, among
other things, whether the registered assisted living
facility where the patients and aides all resided could be
a “private home.” The Court noted the large volume of
pre-Coke case law (still valid following the Coke decision)
setting forth strict tests for “private home” status.
The most common of these entails answering the
following questions: “(1) did the client live in the
living unit as his or her private home before receiving
services; (2) who owns the living unit; (3) who
manages and maintains the residence; (4) would the
client be allowed to live in the living unit if he or she
was not receiving services; (5) the relative difference
in the cost/value of the services provided and the total
cost of maintaining the living unit; and (6) whether the
service provider uses any part of the living unit for its
own business purposes.” See e.g. Fowler v. Incor, 279
Fed. Appx. 590 (10th Cir. 2008).
Tools
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STATE WAGE LAW REQUIREMENTS
The overtime exemption upheld by Coke applies to
the FLSA and extends to states that either 1) have no
state law concerning minimum wage and overtime; or,
2) expressly adopt the companionship exemption either
in their state law or by reference to the FLSA. New
York falls into the latter category. Individuals who meet
the companionship exemption test under federal law are
exempt companions under the New York Labor Law and
New York Department of Labor regulations, provided
however they receive time and one-half of the New York
minimum wage for overtime hours. 12 NYCRR § 1422.2; Ballard v. Community Home Care Referral Service,
Inc., 264 A.D.2d 747 (2d Dept. 1999); New York
Employment Law § 35.03 (Matthew Bender, 2009).
However, New York employers with operations in other
states must be aware of those states’ rules, which often
differ drastically. In direct contrast to the New York
rule, a Pennsylvania appeals court expressly rejected an
employer’s attempt to apply Coke’s ruling applying the
exemption to third party agency providers, deferring to
the Pennsylvania Department of Labor’s interpretation
of the Pennsylvania minimum wage and overtime law,
which provides a companionship exemption only to
“householder employers,” not to agency employers.
Bayada Nurses, Inc. v. Dep’t of Labor & Indus., 958 A.2d
1050 (Pa. Commw. Ct. 2008).
Continued on Page 9
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Page Industry Wage & Hour Litigation After “Coke”
Continued from Page 8
LEGISLATION
Post-Coke Proposals
In the wake of Coke, labor unions and other employee advocates sought to obtain from Congress the overtime
rule they failed to get from the Supreme Court: overtime and minimum wage protections for home health care
workers under Federal law. The Fair Home Health Care Act was introduced in Fall 2007 via two separate bills
in the House and Senate. Rep. Lynn Woolsey (D-Calif.), the sponsor of the House bill, opined that “Since that
time the entire industry has undergone a transformation, and the laws simply haven’t kept up. As a result we’re
leaving many of the industry’s workers out in the cold when it comes to receiving the basic compensation that they
deserve.” While the Fair Home Health Care Act has remained dormant at the committee level, it has the potential
to re-emerge as the current administration continues to push for employee rights and new statutory protection.
New York’s New “Nanny Overtime” Law
In June, New York reached agreement on a “domestic worker” bill of rights, providing new protections to
“person[s] employed in a home or residence for the purpose of caring for a child, serving as a companion to a
sick, convalescing, or elderly person, housekeeping, or for any other domestic service purpose.” This language
was crafted to include most individuals providing services as nannies or maids. The new law provides a 40-hour
week for normal domestic workers and a 45-hour week for live-in workers, as well as one day off each week. Any
overtime beyond the weekly limits and or work scheduled for a day off must be paid at time-and-a-half. The bill
also mandates that employers give domestic workers three paid days off per year and disability insurance. While
FLSA-exempt companionship services employees continue to be exempt from this law (as they are from the New
York Labor Law provisions as discussed above), this bill signals the willingness of the New York Legislature to
enact sweeping proposals designed to protect segments of the healthcare and home services workforces.
In sum, the afterglow of Coke has largely faded, and industry employers need to be constantly aware of trends
in litigation, proposed legislation and union organizing efforts and strategies. TT
Author’s Note: On July 29, 2010, Rep. Linda Sanchez, D-Calif., introduced the Direct Care Workforce
Empowerment Act. This bill seeks to extend Fair Labor Standards Act minimum wage and overtime
protections to home care workers.
Paul J. Siegel, Esq. is an employment law and litigation partner of Jackson Lewis LLP and has represented management in
employment discrimination, affirmative action and labor matters since 1976. Mr. Siegel regularly appears before Federal
and state agencies and courts in various equal employment, wage-hour and labor law matters, and in April 1991 he argued
a landmark age discrimination case before the United States Supreme Court. Mr. Siegel graduated magna cum laude from
the State University of New York at Buffalo (Phi Beta Kappa) in 1973 and received his Juris Doctor degree with honors from
Emory University School of Law in 1976.
Ana C. Shields, Esq. is an associate in the Long Island office of Jackson Lewis LLP where she exclusively practices in
employment law. She has been involved in proceedings before Federal and state courts, the American Arbitration Association
and administrative agencies, and she has successfully argued appeals before the United States Court of Appeals for the
Second Circuit. Ms. Shields is a graduate of Harvard University (A.B., cum laude, 2000), and St. John’s University School
of Law (J.D. 2003), where she was a published member of the New York International Law Review.
Noel P. Tripp, Esq. is an associate in the Long Island office of Jackson Lewis LLP and has practiced exclusively in employment
law. He has been involved in matters pending before Federal and state courts and administrative agencies covering the
gamut of employment-related matters from discrimination and workplace harassment to wage/hour disputes and affirmativeaction compliance. Mr. Tripp is a graduate of Dartmouth College (A.B. 1999), and Fordham Law School (J.D. 2006).
Tools
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