Month: July 2014

Generally, plans that must comply with ERISA must file a Form 5500 by the last day of the seventh month after the close of their plan year. For calendar year plans this means the due date for the Form 5500 is July 31. Government plans (which includes most public schools) generally do not need to comply with ERISA and therefore do not need to file a Form 5500. Many church plans also are exempt from this requirement.

A Form 5500 is needed for both qualified (retirement) plans and welfare (group) plans. Welfare plans include plans that provide medical, prescription drug, dental, vision, long term and short term disability, group term life insurance, health flexible spending accounts, and accidental death and dismemberment benefits. While other plans may also be considered welfare plans, these are the most common. Qualified (retirement) plans include defined benefit, profit sharing, stock bonus, money purchase, and 401(k) plans, Code section 403(b) plans covered by Title I of ERISA, and IRA plans established by an employer. Qualified plans generally must file even if they have fewer than 100 participants, although Form 5500-SF often may be filed instead of the full Form 5500. 

Welfare (group) plans generally must file the Form 5500 if:

• The plan is fully insured and it had 100 or more participants on the first day of the plan year  (dependents are not considered “participants” for this purpose unless they are covered because of a qualified medical child support order)
• The plan is self-funded and it uses a trust, no matter how many participants it has
• The plan is self-funded and it relies on the Section 125 plan exemption, if it had 100 or more participants on the first day of the plan year

In addition, beginning with the 2013 Form 5500, all plans that must file a Form M-1 must also file a Form 5500 regardless how small they are.

Beginning this year, welfare plans need to include an attachment labeled “Form M-1 Compliance Information.” There is not a question on the form for this – it is a free form attachment.  See page 18 of the Form 5500 Instructions for details. It is important to include this attachment, even if the plan does not need to file an M-1, because the Form 5500 will be considered incomplete if this section is skipped.  Generally, multiemployer (union) plans that have been in operation for less than 3 years and multiple employer welfare plans (non-union plans that cover multiple employers that are not a part of a controlled group) must file the Form M-1.

Employers may obtain an automatic 2-1/2 month extension by filing Form 5558 by the due date of the Form 5500. 

BYOD stands for bring-your-own-device and it’s a concept that’s gaining in popularity among most major companies, especially those that allow telecommuting. Most employer policies on BYOD cover productivity and ensuring the employees are using the righ…

Last June, the U.S. Supreme Court ruled that a part of the Defense of Marriage Act (DOMA) that limits the definitions of “marriage” and “spouse” to opposite sex marriages and spouses is unconstitutional. Since then, the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Department of Health and Human Services (HHS) have issued several notices that provide that, for purposes of federal taxes and employee benefits, a person legally married to a same-sex person in any state or foreign country is considered married even if he or she moves to a state that does not recognize same-sex marriages.

In contrast to this “state of celebration” approach, under the Family and Medical Leave Act (FMLA) an employee is considered married — or unmarried — based on the law of the state in which he or she lives when FMLA begins. The DOL has now issued a Proposed Rule that would change the FMLA definition of spouse to match the definition that is being used for other purposes — that is, if an employee who is legally married to a same-sex individual requests FMLA to care for the same-sex spouse, or the same-sex spouse’s child, FMLA would be available even if the employee lives in a state that does not recognize same-sex marriage. The federal government does not consider civil unions or legally recognized domestic partnerships as marriages, so this change would not affect employees with these arrangements.

Employers should continue to use the employee’s place of residence to determine whether FMLA should be offered until the proposed change becomes final. Comments on the proposed change may be made until August 22, 2014, so the earliest this change would be effective is sometime this fall. Employers, of course, are free to offer leave even though it is not legally required.

The DOL has issued an FAQ on the proposed rule that employers may find helpful.

For further information including best practices in FMLA, attend UBA’s webinar, “Curbing FMLA Abuse,” on Thursday, July 10, 2014, at 2:00 p.m. ET / 11:00 a.m. PT. Go to http://bit.ly/1pJqIfR and enter code UNUMUBA for a $149 discount. 

The Family and Medical Leave Act (FMLA) regulations that became effective in 2009 provide employers with mechanisms by which we can better curb FMLA abuse. However, there are also some traps employers can fall into if they do not review the regulations carefully and administer leave requests appropriately. 

The following are the top 10 mistakes employers make that allow FMLA abuse and can create liability for employers:

1. Improperly Determining Eligibility: Some things to consider when determining eligibility include: employees must have worked for a covered employer, they must have worked 1,250 hours and 12 months, and they must have worked at a worksite where there are 50 employees in a 75-mile radius.
    
2. Deeming Employees FMLA Eligible: An employer cannot “deem” an employee eligible for FMLA if they are not eligible. An employer cannot deem an absence to be FMLA-covered if it is not. 
    
3. Failure to Provide Required Notices: Employers have to give four notices: a general notice, eligibility notice, rights and responsibilities notice, and a designation notice. It’s important to know how and when these notices can be given.
    
4. Using a Calendar Year 12-month Period: An employer can choose the method by which the applicable 12-month period is measured (calendar, fixed year, measured forward or rolling backward) during which an employee is entitled to leave.
    
5. Failure to Calculate Leave Entitlement Appropriately: There are different regulations that determine how holidays within FMLA are treated, how much leave an employee is entitled to take based on their actual workweek, what to do if an employee’s schedule varies from week to week, and how to calculate FMLA time for an employee that was scheduled to work overtime but could not do so due to an FMLA qualifying event.
    
6. Failure to Properly Designate FMLA Time: Employers must designate FMLA time within five business days of determining that leave qualifies as FMLA. Employers can also track intermittent leave in the smallest increment used to track other forms of leave, provided it is not more than one hour. Special rules apply.
    
7. Inappropriate Use of Medical Certifications: An employer must provide an employee written notice that a certification is incomplete or insufficient. An employer can also contact the Health Care Provider for clarification or authentication, but it is important to know who can make contact.
    
8. Failure to Request a new Certification and Re-determine Eligibility in a new Leave Year: Once an employee is determined to be eligible for FMLA, he or she remains eligible for one year for that leave reason. It is important to know, however, what to do if an employee’s need for leave lasts beyond a year. There are steps employers can take to protect against abuse in this area.
    
9. Improper Use of ReCertifications: Recertification cannot be requested more often than every 30 days unless certain parameters are in place. However, regardless of the minimum duration of the condition, recertification can be requested every six months.
    
10. Failure to Monitor Intermittent Leaves Closely: There are many things an employer can do to watch for abuse; for example, watch for patterns of absence, request recertifications as often as possible, and require employees to attempt to schedule planned medical treatment at less disruptive times. 

Employers need to know the laws so they can adopt leave policies that prevent abuse while maintaining compliance. 

For further information including best practices in all of the top 10 areas of FMLA mistakes, attend UBA’s webinar, “Curbing FMLA Abuse,” on Thursday, July 10, 2014, at 2:00 p.m. ET / 11:00 a.m. PT. Go to http://bit.ly/1pJqIfR and enter code UNUMUBA for a $149 discount.