Guidance has been issued with regard to the new health care reform coverage for children up to age 26.  The Employee Benefits Security Administration (EBSA) has issued a fact sheet, a series of questions and answers, and an interim final regulation about the new requirements. Basically, the health care reform act signed by President Obama will allow children to remain on their parents’ health coverage up to age 26. This provision is effective for plan or policy years beginning on or after September 23, 2010. Plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days, regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010.

The Labor Department unveiled an online tool to help employers understand how to comply with H-1B visa program requirements.

The tool describes the H-1B program’s standards and provides detailed information about employers’ and workers’ rights and responsibilities, the department said. The tool outlines notification requirements, monetary issues, worksite issues, record keeping, worker protections, and enforcement issues. H-1B visas are granted to highly skilled, college-educated, temporary foreign workers for a maximum of six years.

The tool focuses on compliance with the requirements enforced by the Wage and Hour Division, the department said. “The Labor Department’s goal is to provide employers and the public with user-friendly information regarding both rights and responsibilities under the H-1B program,” Labor Secretary Hilda Solis said.

The H-1B compliance tool is available at http://www.dol.gov/elaws/h1b.htm.

Employers with cafeteria plans can now allow employees to make pretax contributions to cover benefits under the company’s heath plan for dependent children up to age 27, the Internal Revenue Service said April 27 (Notice 2010-38).  The change is related to the new health reform law, IRS said.  The notice will appear in the May 17 edition of the Internal Revenue Bulletin 2010-20.

House Democrats, meanwhile, asked health insurers to stop canceling coverage for policyholders who become sick before a provision in the new law takes effect in 2014.  The chairmen of three House committees urged seven insurers in a letter April 27 to stop the rescissions, a move that they said would be consistent with changes allowing older dependents to remain on a parent’s health plan.  Separately, WellPoint said it would implement a nonrescission provision May 1.

U.S. businesses employ millions of unpaid student interns and recent college graduates to replace regular workers in violation of federal wage and hour laws, the Economic Policy Institute said in a research paper released April 5. “The increasingly competitive labor market for college graduates, combined with the effects of the recession, has intensified the trend of replacing full-time workers with unpaid interns,” EPI researchers Kathryn Anne Edwards and Alexander Hertel-Fernandez said.

The Labor Department’s Wage and Hour Division released an opinion letter in 2004 with six criteria that internships must meet for students not to be considered employees of a firm. The department recently restated the criteria for student interns to be considered a legal unpaid trainee under the Fair Labor Standards Act. Under the criteria, training is similar to that of a vocational school or academic instruction; training is for the intern’s benefit; interns do not displace regular employees; the employer derives no immediate advantage from the intern’s activities; and the student is not necessarily entitled to a job at the end of the internship. If all the criteria are not met, the intern is considered an employee under the FLSA subject to minimum wage and overtime laws.

Economic Institute Research Paper: The Kids Aren’t Alright – A Labor Market Analysis of Young Workers

by MHA

When it comes to plan-related document storage, remember that your primary goal should be to preserve materials in a format allowing for quick and easy retrieval. It’s appropriate to store plan records electronically whenever possible. Also, be sure to retain an executed copy (or countersigned copy, as applicable) of each record, not the unsigned original that may have been sent to you for signature.

We encourage you to follow your company’s internal procedures for disaster recovery for your plan documentation. Disaster recovery plans may include protocol for offsite backup storage, retrieval, and inputting and tracking each document’s retention requirements.

While most vendors can provide reports and current plan documents, the plan administrator ultimately remains responsible for retaining adequate records that support the plan document reports and filings. In addition, you are required to maintain records sufficient to determine the amount of benefits accrued by each participant.

Document Type Retention Requirements:

• Plan Documents (including Basic Plan Document, Adoption Agreement, Amendments, Summary Plan Descriptions and Summary of Material Modifications). Should be retained for at least six years following plan termination.
• Annual Filings (including 5500, Summary Annual Reports, plan audits, distribution records and supporting materials for contributions and testing). Should be retained at least six years.
• Participant Records (including enrollment, beneficiary and distribution forms; QDROs). Should be retained at least six years after the participant’s termination.
• Loan Records should be retained at least six years after the loan is paid off.
• Retirement/Investment Committee meeting materials and notes should be retained for at least six years following plan termination.

by MHA

The Internal Revenue Service (IRS) recently completed two examinations under its Learn, Educate, Self-Correct, and Enforce (LESE) initiative to test and measure the compliance levels of defined contribution retirement plans. Using randomly selected Form 5500 returns, the projects produced findings in two major areas: small plans with assets from $100,000 to $250,000 and top-heavy plan errors.

One of the top errors found for small plans was the failure to secure adequate bonding of plan fiduciaries who handle retirement plan assets. Under ERISA, the amount of bonding should not be less than 10 percent of the amount of funds handled (not less than $1,000 or more than $500,000) with exceptions. Other top errors included failing to amend plans on a timely basis to comply with statutory and regulatory changes, failure to timely submit Form 1099-R, failure to timely deposit elective deferrals, top-heavy failures, joint and survivor waiver failures, impermissible distributions, and failure to include into income “deemed distributions” relating to defaulted loans from the plan.

The second project examined approximately 50 plans with between three and eight participants which were expected to have top heavy plan errors. In general, a 401(k) plan is top heavy when more than 60 percent of the present value of benefits goes to key employees. If a plan is deemed top-heavy, it must apply certain accelerated vesting and contributions to all eligible non-key employees. The most common errors the IRS found were failure to test for top heaviness, improper exclusion of eligible employees, and allocation errors related to compensation and contributions.

In all of the errors found, the IRS has addressed correction procedures within the 401(k) “Fix-it Guide.” Additionally, the LESE project report also contains tips on avoiding the common errors found by the IRS.

Click here to view the project report.

Click here to view the “Fix-it Guide.”

Online social media, such as social networking websites or blogs, can be highly effective business tools for sharing ideas and exchanging information. They also can present problems for employers when dealing with how employees use such media in and outside of workplaces. Improper use of social media by employees can include disclosing employer sensitive or proprietary information over social media or using social media via employers’ electronic communication systems to engage in illegal or fraudulent activities. To help reduce liability for improper use of social media by employees, employers should adopt and implement social media and electronic communications policies to set guidelines for employee use of online social media.

Recent Staff One Presentation Developing an Effective Social Media Policy