Newborns' and Mothers' Health Protection Act of 1996

The law includes important new protections for mothers and their newborn children with regard to the length of hospital stays following the birth of a child. One of the most important changes provided under the NMHPA relates to the amount of time a mother and newborn child can spend in the hospital in connection with the birth of the child. Under NMHPA, group health plans, insurance companies and health maintenance organizations (HMOs) offering health coverage for hospital stays in connection with the birth of a child must provide health coverage for a minimum period of time. NMHPA provides that coverage for hospital stay following a normal vaginal delivery may generally not be limited to less than 48 hours for both the mother and newborn child. Coverage for a hospital stay following a cesarean section may generally not be limited to less than 96 hours for both mother and newborn child.

NMHPA's requirements only apply to group health plans, insurance companies and HMOs that choose to provide insurance coverage for a hospital stay in connection with childbirth. NMHPA does not require group health plans, insurance companies or HMOs to provide coverage for hospital stays in connection with the birth of a child.

Notice of this new law must be treated as a material modification to the Plan's summary plan description and must be communicated in writing to plan participants no later than 60 days after the first day of the first plan year in which such requirements apply.

The Mental Health Parity Act of 1996

This law provides for parity in the application of limits to certain mental health benefits. The mental health parity requirements do not apply to small employers who have between 2 and 50 employees or to any group health plan whose costs increase one percent or more due to the application of these requirements. The mental health parity requirements apply to group health plans for plan years beginning on or after January 1, 1998. There is a so-called "sunset" provision in the law providing that these requirements will cease to apply to benefits for services furnished on or after September 31, 2001. The Mental Health Parity Act does not have a separate effective date for collectively bargained plans.

Under MHPA, group health plans, insurance companies and HMOs offering mental health benefits will not be allowed to set annual or lifetime limits on mental health benefits that are lower than any such limits for medical or surgical benefits. A plan that does not impose an annual or lifetime limit on medical or surgical benefits may not impose such a limit on mental health benefits. MHPA's provisions, however, do not apply to benefits for substance abuse or chemical dependency.

THE FAIR CREDIT REPORTING ACT

Employers who use credit reports from Consumer Reporting Agencies, such as credit bureaus, should note the recent amendments to the Fair Credit Reporting Act (FCRA). These amendments became effective September 30, 1997.

Before you can get a person's credit report, you must notify the individual in writing -- in a document consisting solely of this notice -- that a report may be used.

You also must get the person's written authorization before you ask a credit bureau for the report.

If you rely on a credit report for an "adverse action" -- denying a job application, reassigning or terminating an employee, or denying a promotion -- be aware that:

Step 1: Before you take adverse action, you must give the individual a pre-adverse action disclosure that includes a copy of the individual's credit report and a copy of "A summary of Your Rights Under the Fair Credit Reporting Act" -- a document prescribed by the Federal Trade Commission. The credit bureau that furnishes the individual's report will give you the summary of consumer rights.

Step 2: After you've taken an adverse action, you must give the individual a notice -- orally, in writing, or electronically -- that the action has been taken. An adverse action notice must include:

• the name, address, and phone number of the credit bureau that supplied the credit report;
• a statement that the credit bureau who supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and
• a notice of the individual's right to dispute the accuracy or completeness of any information the bureau furnished, and his or her right to an additional free credit report from the credit bureau upon request within 60 days. In any case, where information in a credit report is a factor in your decision--even if the credit report information is not a major consideration--you must follow the procedures mandated by the FCRA.

You can get reports if you notify each applicant in writing that a credit report may be requested and if you receive the applicant's written consent. Before you reject an applicant based on credit report information, you must make a pre-adverse action disclosure that includes a copy of the credit report and the summary of consumer rights under FCRA. Once you've rejected an applicant, you must provide an adverse action notice if credit report information affected your decision.

There are legal consequences for employers who fail to get an applicant's permission before requesting a credit report or who fail to provide pre-adverse action disclosures and adverse action notices to unsuccessful job applicants. The FCRA allows individuals to sue employers for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations.

The Employers Association

RESPONSIBILITY IN MANAGED CARE ACT

It was no surprise when President Clinton told to the Service Employees International Union that he would fight for his health care plan "a step at a time until we eventually finish this," or when he said "while people may not have wanted to bite the whole apple at once in 1994, almost the whole populace wants to keep nibbling away at the apple."

The surprise is many members of Congress have decided that employer-sponsored health plans are the number-one problem with American health care.

Rep. Charles Norwood (R-GA-10) introduced the Patient Access to Responsible Care Act, H.R. 1415 (PARCA). PARCA already has more than 200 co-sponsors. It imposes 336 new federal requirements on group and individual health insurance plans and 236 new federal requirements for self-insured plans. It exposes you to every state law that is "equivalent or stricter" than federal laws. Your premiums may increase by as much as 39%. But there's more.

The Norwood bill is a bonanza for trial lawyers. It puts you, the employer, at risk of being sued for medical malpractice, wrongful death and personal injury. The American Trial Lawyer's Association is already lobbying for Norwood's bill.

Norwood came up with the Responsibility in Managed Care Act (RMCA), H.R. 2960, as a potential amendment to PARCA to correct this problem. But it doesn't work. Far from limiting your exposure, the new language exempts you only if you do not exercise "discretionary authority to review and make decision on claims for plan benefits." Unfortunately, as an employer plan's sponsor you have a fiduciary duty to exercise that authority every day.

You can call your representative at (202) 225-3121
to ask him or her to oppose the PARCA bill.

Manufacturers' News, National Association of Manufacturers

FACTS AND FIGURES IN THE HUMAN RESOURCE AREA

The five major HR concerns for employers during the past 30 months:

1. Excessive Absenteeism (14 percent increase since 1992)
2. Cost of Employee Benefits
3. Formal charges of discrimination (Sexual Harassment, Age, Race)
4. Drug and alcohol abuse
5. Hiring "Good People"

Do NOT use the word "permanent" when referring to employment status; use "full-time regular" instead.

Get away from using "probationary," suggest: "initial employment adjustment evaluation," or similar wording. Place employees on a specific performance (or attendance) reevaluation period, if applicable for purpose of correcting a deficiency.

Illegal Pre-employment Questions:

1. Have you ever filed a workers' comp claim?
2. Do you have any physical problems or injuries?
3. How many days were you sick last year?
4. Are you currently taking any medication?
5. Have you ever been treated for drug abuse?

In controlling travel expenses, most employers will use: "Actual and Reasonable," rather than put a dollar amount on lodging and meals.

The Federal Drug-Free Workplace Act applies to:
   A. Employees with Federal contracts of at least $25,000
   B. Individuals with Federal contracts of any amount
   C. Businesses or individuals receiving Federal grants of any amount (It does not apply to subcontractors or to those portions of contracts performed outside of the U.S.)

Testing for drugs is NOT required by the Drug-Free Workplace Act.

There are NO Federal or state requirements (IL) for employers to provide breaks for employees (Some restrictions exist for minors.)

Don't let a sexual harassment charge sneak up on you and cost a bundle in settlement and/or litigation--PROVIDE TRAINING.

John Shelsy, MEA

LOOKING AHEAD ON THE LABOR AND EMPLOYMENT LAW SCENE

Following are highlights of trends in the labor and employment law area.

Workplace litigation continues to flourish. Big verdicts and highly publicized cases will continue to produce future litigants and more plaintiff's lawyers in this area of the law. Employers are increasingly turning to arbitration and employment practices liability insurance as options worthy of consideration.

Make sure your company is complying with workers' compensation laws. The Insurance Compliance Division of the Illinois Industrial Commission has recently begun to pursue Illinois employers for failure to have workers' compensation insurance (or have approved status as self-insured) as require by law. Such failure may expose the employer to a monetary penalty of $500 per day for each day of non-compliance. A number of settlements have already been completed with uninsured employers. If your company receives a Notice of Non-Compliance, the prudent course of action is to seek legal counsel immediately.

Keep an eye on the movement in Congress to reduce Family and Medical Leave Act coverage for employers from 50 to 25 employees. Will the next step be FMLA time off with pay?

Class action discrimination suits are on the rise. The Equal Employment Opportunity Commission (EEOC), as part of its new prioritization of claims, is devoting less time to some claims while emphasizing others. The EEOC's main focus is on class action claims that may be brought on behalf of an entire class of individuals rather than just one person.

Because many class action lawsuits originate from a single employee's discrimination complaint, employers should take any discrimination complaints seriously by conducting a thorough investigation and taking prompt and appropriate remedial measures. Prudent employers will also periodically review their hiring, promotion, compensation and disciplinary practices for any inequities.

Employers that are audited by the Internal Revenue Service now have a better chance of winning on the independent contractor issue. The new Small Business Job Protection Act provides employers with powerful legal ammunition under Section 530 "safe haven" protection. Companies using independent contractors should carefully evaluate their Section 530 safe haven arguments if they are audited by the IRS.

Federal contractors beware: OFCCP audits will certainly increase in the next year. The Office of Federal Contract Compliance Programs (OFCCP) is an often overlooked federal agency which monitors federal contractors with over $10,000 in federal contracts to assure that the contractors are complying with various laws. The OFCCP has broad investigatory powers and can fine or even disbar a company that violates the law. OFCCP's five-year goal is to increase compliance by one third of the total number of federal contractors.

Recent discussions with officials in the EEOC's Chicago office, which covers Kane County, revealed several areas on which the EEOC intends to focus in the upcoming year. Kane County employers should note that the EEOC considers that the "honeymoon is over" regarding allowing employers some slack in the Americans with Disabilities Act (ADA) technical violations. For example, the EEOC intends to make more substantial evidence findings relating to illegal questions on job applications and improperly commingling medical records with personnel files. Second, the EEOC Chicago office has increased its legal staff to handle more of its class actions against certain employers. Also, in the area of conciliation agreements following substantial evidence findings, the EEOC plans to issue more findings this year due to other public interest groups willing to litigate the cases the EEOC does not have the resources to litigate. Finally, the EEOC will not be willing to negotiate language issues in their boilerplate conciliation agreements.

The major trend in Illinois public sector law continues to involve the "paring down" of government entities upon filing of a representation petition. Since the Illinois Supreme Court has opened the door for recognizing related public entities as separate employers if certain criteria are met, the Illinois State Labor Board has been left to define the parameters of that ruling. Municipalities should carefully examine the composition of their taxing and governmental bodies, since public sector employers with less than thirty-five employees are not subject to the jurisdiction of the Board.

With the dramatic rise in the use of "contract workers," we can expect to see more claims in this area in 1998. The landmark Microsoft case recently held that misclassified "contract workers" were entitled to employee benefits.