November 2012 - Laborsphere

New Guidance May Help Employers Avoid Significant Penalties: How to Prepare for 2014 and the New Employer Shared Responsibility Rules and Waiting Period Limitation

From our friends in the Employee Benefits and Executive Compensation Group: New guidance is available to help employers prepare for the significant new rules that become effective in 2014, including the employer shared responsibility mandate (i.e., the penalties that may be imposed on an employer that doesn’t offer certain health care coverage) and the prohibition on waiting periods in excess of 90 days, under the Patient Protection and Affordable Care Act of 2010 (health care reform).

Employers may rely on the new guidance through the end of 2014. Employers will not be required to comply with any subsequent guidance that is more restrictive until January 1, 2015 at the earliest. This is good news because it provides employers a measure of certainty about how to prepare for the 2014 employer shared responsibility mandate – particularly those employers concerned about what must be done to avoid significant penalties for failing to provide coverage, or for providing unaffordable coverage.

Click here to download a summary of the current rules to help determine who is a full-time employee for purposes of the employer shared responsibility mandate and the 90-day waiting period limitation, as well as suggested steps employers should take now to prepare for 2014.

PEPping Up the Economy and Employers

On October 26, Governor Tom Corbett (R-PA) signed into law the Promoting Employment Across Pennsylvania Act (PEP) (House Bill 2626). This law is touted as an attempt to create new jobs in Pennsylvania and promote economic development.

What does this mean for thousands of Pennsylvania employers? If you are able to create at least 250 new jobs in Pennsylvania within 5 years (with 100 of the new jobs created within the first 2 years), you will be eligible to retain 95% tax witholdings for the persons employed in the new jobs. Under the Act, the employer may select to remit all of the personal income tax witheld from employees then receive a rebate of the tax from the Commonwealth.

Job creators grow while growing the economy in the process. These tax savings may provide opportunities for employers to further increase their number of employees beyond the initial 250 or reinvest in other areas of the business. Presumably, the Commonwealth benefits as well. More persons employed in the Commonwealth lead to economic growth through purchasing power and sales tax revenues.

There are restrictions and critiques. Non-profit entities, religious organizations, utilities, restaurants/bars, gambling establishments, retail stores, and education or public administration offices need not apply. Plus, an open question remains whether the program amounts to an employee paying an employer for his/her job.

To take advantage of this opportunity, employers must enter into an agreement with the Department of Community and Economic Development (DCED). Any interested employer should move quickly because the ceiling for the program in Pennsylvania is $5 million per year. This Act expires January 1, 2018.

Extreme Weather, Natural Disasters and Personnel Issues

What happens when a business is temporarily closed due to extreme weather? What about overtime as employees try to catch up on work? These are questions that employers on the East coast find themselves asking in the wake of Hurricane Sandy. William Horwitz, counsel in the Florham Park office, has authored a client alert to answer these and other questions that employers are now faced with.

Read the full alert.