Tech Flex. Topics Covered in this Issue:

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1 February 2013, Issue II Tech Flex Topics Covered in this Issue: Benefits: Final HIPAA HITECH Regulations Released ACA Exchange Notice Requirements Delayed Payroll: IRS Releases 2013 Publication Version of Publication 15-B Issued IRS Issues Publication 969 for Use with 2012 Tax Returns Michigan Employer May Charge Child Support Fee Leave: Final Rules Issued on Family Medical Leave Act Expansion DOL Comments on FMLA Leave to Care for Disabled Adult Children

2 FINAL HIPAA HITECH REGULATIONS RELEASED On January 25, 2013, the United States Department of Health and Human Services (HHS) published final regulations implementing changes to the Health Insurance Portability and Accountability Act (HIPAA) made by the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Genetic Information Nondiscrimination Act (GINA). The final regulations update existing HIPAA regulations to reflect the requirements of HITECH and GINA, including updating the privacy and security provisions, outlining increased civil money penalties for violations of HIPAA, and restricting health plans use and disclosure of genetic information as required under GINA. In addition, the final regulations finalize the breach notification rules. The final regulations become effective March 26, Generally, covered entities and business associates must comply with the provisions as modified by the final regulations by September 23, However, enforcement related provisions become effective March 26, 2013 with no compliance period. In addition to the compliance period, as discussed later, the final regulations include an extended compliance period that allows covered entities and business associates to operate under business associate agreements that were effective prior to January 25, 2013 and that comply with the requirements in effect prior to that date. The final regulations are expansive and the following is only a brief summary of some of the specific provisions impacting group health plans, including those provisions relating to business associates, business associate agreements, privacy notices, breach notifications, individual rights, GINA and enforcement and penalties. Business Associates The final regulations clarify the extent to which business associates are directly responsible for compliance with HIPAA as modified by HITECH, including direct responsibility for penalties associated with violations of HIPAA privacy, security and administrative rules. The final regulations specify that business associates must comply with the Security Rule s administrative, physical, and technical safeguards requirements as well as its written compliance policy and documentation requirements. In addition to a business associate s contractual liability to a covered entity for a breach of the business associate agreement with the covered entity, the business associate has direct responsibility for civil and criminal penalties assessed by the Office of Civil Rights of HHS for violations of those Security Rule requirements and the Privacy Rule s business associate agreement requirements. The definition of business associate has now been expanded to include entities that create, receive, maintain, or transmit protected health information (PHI) in connection 2

3 with services provided to a covered entity. In addition, a business associate includes the subcontractor of a business associate. Consequently, the primary business associate is required to obtain satisfactory assurances from the subcontractor that the subcontractor will appropriately safeguard the PHI. The primary business associate is subject to the same business associate agreement requirements as a covered entity with respect to its subcontractor. It is important to note that a covered entity is not required to obtain such satisfactory assurances from a business associate that is a subcontractor. The final regulations also clarify the extent to which an entity would be considered a mere conduit for purposes of determining whether such entity constitutes a business associate. In the preamble to the final regulations, HHS explains that [t]he conduit exception is a narrow one and only relates to the transmission of information such as through the postal service when such entity would only randomly access PHI. Business Associate Agreements The HIPAA Privacy Rule provides that a covered entity must enter into a business associate contract or other written agreement or arrangement in order to disclose PHI to a business associate or to allow a business associate to create or receive PHI on the covered entity's behalf. Similarly, the Security Rule provides that a covered entity must enter into a business associate contract or other arrangement in order to allow a business associate to create, receive, maintain, or transmit electronic PHI on the covered entity's behalf The final regulations modify the content required in the business associate agreement between a covered entity and business associate. A few of the required changes include: Reflect that the obligation to obtain satisfactory assurances from a business associate that is a subcontractor that will handle PHI as required under law is the responsibility of the business associate and not the covered entity. Add a provision stipulating that if the business associate becomes aware of noncompliance by the subcontractor, the business associate must respond as a covered entity is required to do, including terminating the agreement if warranted. Demonstrate in the revised business associate agreement that the business associate must report any breaches of PHI to the covered entity. As noted earlier, the final regulations provide for a special transition period for certain business associate agreements. Valid business associate agreements currently in place, entered into prior to January 25, 2013 and not renewed or modified between March 26, 2013 and September 23, 3

4 2013, are deemed to be compliant with the final regulations until the earlier of (1) the date each contract is renewed or modified on or after September 23, 2013 or (2) September 22, Business associate agreements executed after January 25, 2013 do not qualify for the transition rule and will need to comply with the requirements of the final regulations. Notices of Privacy Practices Under HIPAA, a covered entity is required to provide a notice of privacy practices to each individual who is the subject of PHI describing the uses and disclosures of PHI that may be made by the covered entity, the individual's rights, and the covered entity's legal duties with respect to the PHI. The final regulations require that additional information must be provided in the privacy notice including the following: Description of certain circumstances where authorization will be required from the individual to whom the PHI pertains for the use or disclosure of PHI. Information regarding fundraising communications and the option to decline receiving such communications. A statement regarding the individual s right to be notified where the individual s PHI has been breached. The final regulations reiterate that covered entities must update and distribute the Notice of Privacy Practices. In reiterating the covered entity s responsibility, the preamble to the final regulations states: business associates are not required to comply with other provisions of the Privacy Rule, such as providing a notice of privacy practices or designating a privacy official The updated Notice of Privacy Practices must be provided by covered entities no later than September 23, Definition of Breach and Required Notification The final regulations continue to require that a covered entity must notify each individual whose unsecured PHI was or is reasonably believed by the covered entity to have been accessed, acquired, used or disclosed due to a breach not later than sixty (60) days following the discovery of such breach. The final regulations modify the definition of breach. Under the interim final breach notification rule a breach would have been considered to have occurred if the access, 4

5 use or disclosure poses a significant risk of financial, reputational or other harm to an individual. The final regulations stipulate that an acquisition, access, use, or disclosure of protected health information in a manner not permitted is presumed to be a breach unless the covered entity or business associate, as applicable, demonstrates that there is a low probability that the protected health information has been compromised. The assessment of whether there is a low probability that the protected health information has been compromised must be based on an assessment of at the least the following factors: The nature and extent of the PHI involved, including the types of identifiers and the likelihood of re-identification. The identity of the unauthorized person who used the PHI or to whom the disclosure was made. Whether the PHI was actually acquired or viewed. The extent to which the risk to the PHI has been mitigated. The final regulations continue to require that the covered entity notify the individual that his or her PHI has been subject to a breach. A business associate shall, following the discovery of a breach of unsecured protected health information, notify the covered entity of such breach. The final regulations provide clarification regarding the circumstances under which a business associate would be an agent of the covered entity for purposes of the obligations under HIPAA, including the calculation of the notification period under the breach notification rules. Previously, the HIPAA regulations were silent as to which laws would apply for determining whether a business associate is an agent. The final regulations now specify that the determination will be based upon the facts and circumstances and will be determined using federal common law principles of agency. Individual Rights The HIPAA Privacy Rule provides individuals certain rights with respect to their health information. Specifically, covered entities must provide individuals with the right to access and amend their PHI, provide individuals with an accounting of disclosures of their PHI, allow individuals the right to request restrictions on the uses and disclosures of their PHI, and allow individuals the right to request that they receive their PHI at alternative locations or by alternative means. The final regulations expand the individuals rights in a number of ways including the following: 5

6 GINA Individuals may obtain electronic access to their PHI that is maintained electronically on a designated record set. If an individual requests a covered entity to transmit PHI directly to another person, the covered entity must do so. However, the individual s request must be in writing and signed by the individual and clearly identify where and to whom the PHI must be sent. Permit covered entities disclosure of a decedent s PHI to family members and others who were involved in the care or payment for care of the decedent prior to death, unless doing so is inconsistent with any prior expressed preference of the individual that is known to the covered entity. Expanding the situations in which a covered entity must agree to an individual s request to restrict the disclosure of PHI about the individual to a health plan. For example, if the disclosure is for carrying out payment or health care operations and is not otherwise required by law. GINA prohibits health plans and health insurers from using or disclosing genetic information, such as family history, for underwriting purposes. The final regulations adopt the prohibition on using or disclosing protected health information that is genetic information for underwriting purposes to all health plans that are covered entities under the HIPAA Privacy Rule, including those to which GINA does not expressly apply, except with regard to issuers of long term care policies. In addition, the final regulations incorporate genetic information into the definition of health information by stating: The final rule modifies of the Privacy Rule to: (1) Revise the definition of health information to make clear that the term includes genetic information;.. The term underwriting purposes means: Rules for, or determination of, eligibility (including enrollment and continued eligibility) for, or determination of, benefits under the plan, coverage, or policy. The computation of premium or contribution amounts under the plan, coverage, or policy. The application of any pre-existing condition exclusion under the plan, coverage, or policy. Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits. 6

7 Civil Monetary Penalties The final regulations adopt the monetary penalties that may be levied on covered entities and business associates for violations of HIPAA as permitted under HITECH. The final regulations define the four categories of violations that reflect increasing levels of culpability and corresponding tiers of penalties as follows: Violation category Each violation All such violations of an identical provision in a calendar year Did Not Know $100-$50,000 $1,500,000 Reasonable Cause $1,000- $50,000 $1,500,000 Willful Neglect - Corrected $10,000-$50,000 $1,500,000 Willful Neglect Not Corrected $50,000 $1,500,000 In determining the penalty, HHS will take into consideration the following: The nature and extent of the violation, consideration of which may include but is not limited to: o The number of individuals affected. o The time period during which the violation occurred. The nature and extent of the harm resulting from the violation, consideration of which may include but is not limited to: o Whether the violation caused physical harm. o Whether the violation resulted in financial harm. o Whether the violation resulted in harm to an individual s reputation. o Whether the violation hindered an individual s ability to obtain health care. The history of prior compliance with the administrative simplification provisions, including violations, by the covered entity or business associate, consideration of which may include but is not limited to: o Whether the current violation is the same or similar to previous indications of noncompliance. o Whether and to what extent the covered entity or business associate has attempted to correct previous indications of noncompliance. o How the covered entity or business associate has responded to technical assistance from the Secretary provided in the context of a compliance effort. o How the covered entity or business associate has responded to prior complaints. 7

8 The financial condition of the covered entity or business associate, consideration of which may include but is not limited to: o Whether the covered entity or business associate had financial difficulties that affected its ability to comply. o Whether the imposition of a civil money penalty would jeopardize the ability of the covered entity or business associate to continue to provide, or to pay for, health care. The size of the covered entity or business associate. It is important to note that the final regulations eliminated the defense to the imposition of penalties if the covered entity or business associate did not know and with the exercise of reasonable diligence would not have known of the violation. These violations are now punishable under the lowest tier of penalties. The final regulations provide as follows: the Secretary may not impose a civil money penalty on a covered entity or business associate for a violation if the covered entity or business associate establishes to the satisfaction of the Secretary that the violation is (1) Not due to willful neglect; and (2) Corrected during either: (i) The 30-day period beginning on the first date the covered entity or business associate liable for the penalty knew, or, by exercising reasonable diligence, would have known that the violation occurred; or (ii) Such additional period as the Secretary determines to be appropriate based on the nature and extent of the failure to comply. For a copy of the final regulations as published in the January 25, 2013 Federal Register, please click on the link provided below. 8

9 ACA EXCHANGE NOTICE REQUIREMENTS DELAYED Section 18B of the Fair Labor Standards Act (FLSA), as added by the Affordable Care Act (ACA), provides that employers subject to the FLSA must furnish employees with a written notice, by March 1, 2013, explaining the availability of Exchanges, the services provided by Exchanges, how to contact an Exchange, and other pertinent information. On January 24, 2013, the Department of Labor (DOL) announced that the notice requirement will not take effect on March 1, The announcement was made as part of a Frequently Asked Questions (FAQ) document regarding the ACA. Background : The ACA provides that employers must provide to each employee at the time of hire, and for current employees, no later than March 1, 2013, a written notice containing the following: Information related to the existence of Exchanges, including a description of the services provided by the Exchanges, and the manner in which the employee may contact Exchanges to request assistance; If the employer plan s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, an explanation that the employee may be eligible for a premium tax credit and a cost sharing reduction if the employee purchases a qualified health plan through an Exchange; and If the employee purchases a qualified health plan through an Exchange, an explanation that the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such employer contribution may be excludable from income for Federal income tax purposes. Notice Requirement Delayed Until the Late Summer or Fall of 2013 On January 24, 2013, the DOL posted an FAQ document announcing the delayed effective date. The DOL explained that the any guidance related to the required notice will be coordinated with the Department of Health and Human Services educational efforts and Internal Revenue Service guidance on minimum value, and noted that the agencies intend to provide employers with sufficient time to comply. The DOL expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges. For a copy of the DOL announcement, please click on the link provided below. 9

10 IRS RELEASES 2013 PUBLICATION 15 The Internal Revenue Service has released the 2012 Publication 15 commonly known as Circular E - Employer's Tax Guide. Publication 15 explains the tax responsibilities of an employer in relation to withholding, depositing, reporting, paying and correcting employment taxes. The 2013 version of Publication 15 addresses several changes. A few key changes worth noting were summarized as follows: Social security and Medicare tax for The employee tax rate for social security is 6.2%. Previously, the employee tax rate for social security was 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The social security wage base limit is $113,700. Employers should implement the 6.2% employee social security tax rate as soon as possible, but not later than February 15, After implementing the new 6.2% rate, employers should make an adjustment in a subsequent pay period to correct any underwithholding of social security tax as soon as possible, but not later than March 31, The Medicare tax rate is 1.45% each for the employee and employer for 2013, unchanged from There is no wage base limit for Medicare tax. Social security and Medicare taxes apply to the wages of household workers you pay $1,800 or more in cash or an equivalent form of compensation. Social security and Medicare taxes apply to election workers who are paid $1,600 or more in cash or an equivalent form of compensation. Additional Medicare Tax withholding. In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Increased withholding on supplemental wages that exceed $1 million. Beginning January 1, 2013, the with-holding rate on supplemental 10

11 wages paid to any one employee during the calendar year that exceed $1 million is 39.6%. Previously, the withholding rate on supplemental wages that exceed $1 million was 35%. For a copy of the 2013 Publication 15, please click on the link provided below: VERSION OF PUBLICATION 15-B ISSUED The 2013 version of Publication 15-B has been released by the Internal Revenue Service. This publication which is a supplement to Publication 15 discussed in the previous article is a useful reference for employers on the tax treatment of fringe benefits. Specifically, it contains information for employers on the employment tax treatment of various fringe benefits, including accident and health coverage, adoption assistance, company cars and other employer-provided vehicles, dependent care assistance, educational assistance, employee discount programs, group-term life insurance, moving expense reimbursements, health savings accounts (HSAs), and transportation benefits. It is important to note that Publication 15-B uses the term "employment taxes" to refer to federal income tax withholding as well as Social Security and Medicare (FICA) and federal unemployment (FUTA) taxes. The 2013 version of Publication 15-B is substantially similar to the 2012 version. However, below are a few of the statements made in the 2013 What s New Introduction addressing specific modifications from specific 2012 provisions. $2,500 limit on a health flexible spending arrangement (FSA). For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. Additional Medicare Tax withholding. In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 11

12 Extension of the exclusion for educational assistance programs. The exclusion for educational assistance has been extended to years beginning after December 31, Extension of the exclusion for adoption assistance programs. The exclusion for adoption assistance has been extended to years beginning after December 31, Leave based donation programs to aid victims of Hurricane Sandy. Under these programs, employees may donate their vacation, sick, or personal leave in ex-change for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. The donated leave will not be included in the income or wages of the employee. The employer may deduct the cash payments as business expenses or charitable contributions. Cents per mile rule. The business mileage rate for 2013 is 56.5 cents per mile. You may use this rate to reimburse an employee for business use of a personal vehicle, and under certain conditions, you may use the rate under the cents-permile rule to value the personal use of a vehicle you provide to an employee. See Cents-Per-Mile Rule in section 3. Qualified parking exclusion and commuter transportation benefit. For 2013, the monthly exclusion for qualified parking is $245 and the monthly exclusion for com-muter highway vehicle transportation and transit passes is $245 For a copy of the 2013 version of Publication 15-B, please click on the link provided below: 12

13 IRS ISSUES PUBLICATION 969 FOR USE WITH 2012 TAX RETURNS The Internal Revenue Service (IRS) has issued an updated Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans) helpful in completing 2012 tax returns. The Publication discusses several tax-advantaged plans including health flexible spending accounts (FSAs); health reimbursement arrangements (HRAs); medical savings accounts (MSAs); and health savings accounts (HSAs) and reviews the tax qualifications for these plans. The 2012 version has been updated to reflect the following two changes. (1) $2,500 limit on a health flexible spending arrangement (FSA). For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. (2) Qualified HSA distributions. Beginning in 2012, you can no longer make a Qualified HSA distribution from a flexible spending account (FSA) or a health reimbursement arrangement (HRA). For a copy of Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans (for 2012 Tax Returns), please click on the link provided below: MICHIGAN EMPLOYERS MAY CHARGE CHILD SUPPORT FEE Effective March 28, 2013, MCL , as amended by Michigan Senate Bill 1001, an employer may charge and collect from his or her employee a fee in response to a notice of child support income withholding. Generally, the amount of the fee will be determined by the means by which the employer, in the case of an employee, submits the child support income to the appropriate state disbursement unit. The law as amended provides as follows: If a source of income submits income withholding payments by electronic means, the source of income may charge the payer a fee of $1.00 each time the source of income withholds payment from the payer, but not to exceed $2.00 per month. If a source of income submits income withholding payments by other than electronic means, the source of income may charge the payer a fee of $2.00 each time the source of income withholds payment from the payer, but not to exceed $4.00 per month. 13

14 If a source of income submits income withholding payments by electronic means, the source of income may charge the payer a fee of $1.00 each time the source of income withholds payment from the payer, but not to exceed $2.00 per month. If a source of income submits income withholding payments by other than electronic means, the source of income may charge the payer a fee of $2.00 each time the source of income withholds payment from the payer, but not to exceed $4.00 per month. It is important to note that, if collected, the fee must be collected separate and apart from the income withheld for child support. For a copy of Michigan Senate Bill 1001 now codified as MCL , please click on the following link: FINAL RULES ISSUED ON FAMILY MEDICAL LEAVE ACT EXPANSION On the February 6, 2013, the United States Department of Labor (DOL) published the final regulations that implement and finalize two expansions of the protections afforded under the Family Medical Leave Act (FMLA). The effective date of the final rule is 30 days after date of publication in the Federal Register resulting in an effective date of March 8, First expansion: Pursuant to the National Defense Authorization Act for Fiscal Year 2010, families of eligible veterans are provided with the same job-protected FMLA leave currently available to families of military service members. The final regulations implement this expansion and also provides more military families with an opportunity to take leave for activities that occur when a service member is deployed. Second expansion: The 2008 Regulations modified the existing FMLA rules to enable airline personnel and flight crews enhanced opportunities to use FMLA job protected leave. The final regulations adopt this expansion. In addition to these two significant changes, the final rule also provides clarifications related to minimum increments of leave, physical impossibility and record retention requirements. A summary of the specific regulations modified under the final rule as compared to the regulations effective January 16, 2009 was provided by the DOL Wage and Hour Division and may be found at: 14

15 A sampling of the DOL comparison is as follows: Qualifying Exigency Leave: 2008 Regulations: Eligible employees may take qualifying exigency leave for any of the following reasons: (1) short notice deployment; (2) military events and related activities; (3) childcare and school activities; (4) financial and legal arrangements; (5) counseling; (6) rest and recuperation; (7) post-deployment activities; and (8) additional activities Regulations: A new qualifying exigency leave category for parental care leave has been added. Eligible employees may take leave to care for a military member s parent who is incapable of self-care when the care is necessitated by the member s covered active duty. Such care may include arranging for alternative care, providing care on an immediate need basis, admitting or transferring the parent to a care facility, or attending meetings with staff at a care facility Regulations: Employees who request qualifying exigency leave to spend time with a military member on rest and recuperation leave may take up to five days of leave Regulations: The amount of time an eligible employee may take for rest and recuperation qualifying exigency leave is expanded to a maximum of 15 calendar days. Military Caregiver Leave: 2008 Regulations: An eligible employee who is the spouse, son, daughter, parent, or next of kin of a covered servicemember (a current servicemember) of the Armed Forces, including National Guard and Reserve members, with a serious injury or illness incurred in the line of duty on active duty for which the servicemember is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, may take up to 26 workweeks of FMLA leave to care for the servicemember in a single 12-month period Regulations: The definition of covered servicemember is expanded to include covered veterans who are undergoing medical treatment, recuperation, or therapy for a serious injury or illness Regulations: A serious injury or illness means an injury or illness incurred by a covered servicemember in the line of duty on active duty that may render the servicemember medically unfit to perform the duties of his or her office, grade, rank, or rating. 15

16 2013 Regulations: The definition of a serious injury or illness for a current servicemember is expanded to included injuries or illnesses that existed before the beginning of the member s active duty and that were aggravated by service in the line of active duty in the Armed Forces. Required Information for Certification of a Qualifying Exigency: 2008 Regulations: Upon an employer s request, an employee must provide a copy of the covered military member s active duty orders to support request for qualifying exigency leave. In addition, upon an employer s request, certification for qualifying exigency leave must be supported by a certification containing the following information: statement or description of appropriate facts regarding the qualifying exigency for which leave is needed; approximate date on which the qualifying exigency commenced or will commence; beginning and end dates for leave to be taken for a single continuous period of time; an estimate of the frequency and duration of the qualifying exigency if leave is needed on a reduced scheduled basis or intermittently; and if the qualifying exigency requires meeting with a third party, the contact information for the third party and description of the purpose of meeting Regulations: The list of required information for certification for qualifying exigency leave for Rest and Recuperation leave is expanded to include a copy of the military member s Rest and Recuperation leave orders, or other documentation issued by the military setting forth the dates of the military member s leave. Certification of Military Caregiver Leave: 2008 Regulations: The following healthcare providers may complete a certification for a covered servicemember: (1) U.S. Department of Defense (DOD) health care provider; (2) U.S. Department of Veterans Affairs (VA) health care provider; (3) DOD TRICARE network authorized private health care provider; (4) DOD non-network TRICARE authorized health care provider Regulations: The list of health care providers who are authorized to complete a certification for military caregiver leave for a covered servicemember is expanded to include health care providers, who are not affiliated with DOD, VA, or TRICARE Regulations: Second and third opinions are not permitted, but an employer may seek authentication and/or clarification. Recertifications are not permitted. 16

17 2013 Regulations: Second and third opinions may be required by an employer for military caregiver leave certifications that are completed by health care providers who are not affiliated with DOD, VA, or TRICARE. Employee Eligibility Hours of Service and USERRA: 2008 Regulations: To be eligible to take FMLA leave, an employee: (1) has been employed by the same employer for at least 12 months; (2) has been employed for at least 1250 hours of service during the 12-month period immediately preceding commencement of the leave; and (3) is employed at a worksite where 50 or more employees are employed by the employer within 75 miles of the worksite Regulations: The USERRA-protections for employees who miss work due to USERRA-covered military service are clarified: the protections afforded by USERRA extend to all military members (active duty and reserve), and all periods of absence from work due to or necessitated by USERRA-covered service is counted in determining an employee s eligibility for FMLA leave. Minimum Increments of Leave: 2008 Regulations: Permits an employer who accounts for leave in varying increments at different times of the day or shift to also account for FMLA leave in varying increments, provided the increment used for FMLA leave is no greater than the smallest increment used for other types of leave during the period in which the FMLA leave is taken Regulations: Clarifying language is added that employers must track FMLA leave using the smallest increment of time used for other forms of leave subject to a one hour maximum Regulations: Where it is physically impossible for an employee to start or end work mid-way through a shift, the entire period the employee is forced to be absent is counted against the employee s FMLA leave entitlement Regulations: Clarifying language is added noting that the physical impossibility provision is to be applied in only the most limited circumstances, and the employer bears the responsibility to restore the employee to the same or equivalent position as soon as possible. 17

18 Employee Eligibility Hours of Service Requirement, Calculation of Leave, and Recordkeeping Relating to Airline Flight Crew Employees: 2008 Regulations: Not applicable added under 2013 Final Rule 2013 Regulations: The provisions concerning airline flight crew employees are placed in Subpart H: Special Rules Applicable to Airline Flight Crew Employees ( ) , Special rules for airline flight crew employees, hours of service requirement. The hours of service criteria will be met if during the previous 12-month period the airline flight crew employee has worked or been paid for not less than 60% of the applicable monthly guarantee and has worked or been paid for not less than 504 hrs (not including commute time, vacation, sick, or medical leave) , Special rules for airline flight crew employees, calculation of leave. An eligible airline flight crew employee is entitled to 72 days for one or more of the FMLAqualifying reasons other than military caregiver leave and 156 days for military caregiver leave. Employers must account for FMLA leave for intermittent or reduced schedule leave for airline flight crew employees in an increment no greater than one day , Special Rules for airline flight crew employees, recordkeeping requirements. Employers of airline flight crew employees must maintain certain records, including any records or documents that specify the applicable monthly guarantee for each category of employee to whom the guarantee applies, including any relevant collective bargaining agreements or employer policy documents that establish the applicable monthly guarantee; as well as records of hours scheduled Updated Model Notices: It is important to note that as part of the final rule regulations, DOL updated a number of model notices as noted below. In addition, the DOL provided a number of fact sheets regarding the final rule to implement the statutory amendments to the FMLA. Notice of Eligibility and Rights & Responsibilities Certification of Qualifying Exigency For Military Family Leave 18

19 Certification for Serious Injury or Illness of a Current Servicemember - for Military Family Leave Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave Employee Rights and Responsibilities under the Family and Medical Leave Act For a copy of the Final Rule as published in the February 6, 2013 Federal Register, please click on the link provided below: DOL COMMENTS ON FMLA LEAVE TO CARE FOR DISABLED ADULT CHILDREN On January 14, 2013, the United States Department of Labor (DOL) released Interpretation No providing guidance on the availability of Family Medical Leave Act (FMLA) leave for an employee to care for an adult son or daughter (age 18 or older) with a disability. Leave is available under the FMLA to eligible employees whose adult child: (1) has a disability as defined by the American with Disabilities Act (ADA); (2) is incapable of self-care because of that disability and; (3) has a serious health condition for which he or she is in need of care. The DOL guidance clarifies that the child s age at the onset of a disability is not relevant when determining whether a parent is entitled to FMLA leave (i.e., the disability can occur before or after the child s 18th birthday). In addition, the guidance discusses the implications of changes that were made in 2008 to broaden the scope of the ADA s definition of disability observing that these changes will increase the number of adult children with disabilities whose parents may be entitled to take FMLA leave if other FMLA requirements are also met. The guidance also notes that an adult child s serious health condition need not be directly related to his or her disability. 19

20 Interpretation also explains that the expanded definition of disability and the clarification that an adult child s disability need not occur before age 18 will affect parents of adult children who have sustained an injury or illness in military service. According to the guidance, these parents may be entitled to take FMLA leave in subsequent 12-month periods in addition to the 26 workweeks permitted in the initial 12- month period under the FMLA s military caregiver provisions, if the child s injury or illness lasts beyond the 12-month period covered by those provisions and other FMLA requirements are met. For a copy of the DOL Interpretation No please click on the link provided below: Please contact ADP National Account Services for further information at: th Drive SE Suite 200 Bothell, WA Phone: (425) Fax: (425) ADP National Account Services does not make any representation or warranty that the information contained in this newsletter, when used in a specific and actual situation, meets applicable legal requirements. This newsletter is provided solely as a courtesy and should not be construed as legal advice. The information in this newsletter represents informational highlights and should not be considered a comprehensive review of legal and compliance activity. Your legal counsel should be consulted for updates on law and guidance that may have an impact on your organization and the specific facts related to your business. **Please note that the information provided in this document is current as of the date it is originally published.** 20