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 for the Trade, July/August 2010 Tools for the 99 Troy Road, Suite 200 East Greenbush, NY 12061 Trade (P) 518.463.1118 (F) 518.463.1606 www.nyshcp.org Managing Editor: Claudia J. Hammar Tools for the Trade is published bimonthly by the New York State Association of Health Care Providers, Inc. (HCP). Copyright © 2010 New York State Association of Health Care Providers, Inc. All rights reserved. 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 Get these new savings NOW! Introducing the NEW 2010 Social Security Jobs Tax Program. Take advantage of the new Hiring Incentives to Restore Employment (HIRE) Act. Cash flow is immediate and Social Security savings are 6.2% of wages paid! This t t t new service will: Implement a timely process to qualify newly hired employees Streamline the required paperwork Provide quarterly reports for the tax exemption for all eligible employees With a client list that includes over 40 home healthcare agencies, Arnold Standard has knowledge and experience agencies need. Best of all, our fee for this service is based on savings, so there is no economic risk! To learn more, email info@arnoldstandard.com, or call Bob Arnold at 1-800-645-6800. Act now—this program ends December 31st! Tools for the 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 for the Trade, July/August 2010 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 2010 HCP Annual Management Conference & Exhibition ... Bridges Marriott Long Island Hotel & Conference Center Uniondale, New York October 26 - 29, 2010 Register Now and SAVE with Early Bird Rates! 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 for the Trade, July/August 2010 Page