Breazeale, Sachse & Wilson, L.L.P. RSS Feed

CMS Withdraws Proposed MFAR Rule

16 Sep 2020 00:00:00 -0800

The Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced on Monday, September 14, 2020 that CMS is officially withdrawing the controversial proposed Medicaid Fiscal Accountability Regulation (MFAR). If finalized, MFAR would have drastically altered the way states are able to finance their share of Medicaid. MFAR was opposed by a variety of stakeholders, including hospitals, physicians, national healthcare associations, governors, and state health departments. Verma cited that these stakeholders raised concerns about “unintended consequences” of MFAR.

DOL Announces Revisions to FFCRA That Will Seriously Impact Healthcare Providers

15 Sep 2020 00:00:00 -0800

DOL Announces Revisions to FFCRA That Will Seriously Impact Healthcare Providers

On September 11, 2020, the U.S. Department of Labor's Wage and Hour Division (WHD) announced revisions to regulations that implement the paid sick leave and expanded family and medical leave provisions of the Families First Coronavirus Response Act (FFCRA).

Most significantly, the revised rule will require healthcare providers to provide FFCRA protected/paid leave to a broader range of employees than previously believed. The revisions also clarify other employers' responsibilities regarding FFCRA paid leave.

The revisions were issued in response to the U.S. District Court for the Southern District of New York's August 3, 2020, decision invalidating portions of the FFCRA regulations and are slated to go into effect on September 16, 2020.

You can read the revisions here: https://www.federalregister.gov/documents/2020/09/16/2020-20351/paid-leave-under-the-families-first-coronavirus-response-act

In short, the revisions:

1.) Health Care Provider Definition Narrowed:

The FFCRA permits employers to exclude "health care providers" from the Act's leave benefit provisions. The DOL initially defined the term broadly, excluding from FFCRA coverage "anyone employed at any doctor's office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity." as well as any individual employed by an entity that contracts with any of these institutions, as well as anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical supplies.

The New York Federal Court struck down this definition as too expansive. In response, the DOL has narrowed the exclusion to essentially track the definition provided in 29 CFR 825.102. Generally, this only includes those individuals capable of providing health care services, which include "diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care," or otherwise meet the definition of the term found in the Family Medical Leave Act (FMLA). The FMLA definition includes "doctors of medicine or osteopathy" authorized to practice in their state or other medical professionals such as podiatrists, dentists, clinical psychologists, optometrists, many chiropractors, nurse practitioners, nurse midwives, clinical social workers, physician assistants, and other similar professionals.

Under the new rule, employers may also elect to exempt nurses, nurse assistants, medical technicians, and laboratory technicians who process test results as health care providers.

The revision also offers guidance on the type of employee who may not be exempted as a healthcare provider: information technology (IT) professionals, building maintenance staff, human resources personnel, cooks, food service workers, records managers, consultants, and billers. The revised rule states that while the services provided by these employees may be related to patient care - e.g., an IT professional may enable a hospital to maintain accurate patient records - they are too attenuated to be integrated and necessary components of patient care.

2.) Work Availability Reaffirmed. This revision reaffirms that paid sick leave and expanded family and medical leave may be taken only if the employee has work available from which to take leave. In other words, if there is no work available, the employee is not entitled to protected leave. This applies to all qualifying reasons for paid sick leave and expanded family and medical leave.

3.) Employer Permission Still Required for Intermittent Leave. The revision confirms that an employee must obtain employer permission in order to take paid sick leave or expanded family and medical leave intermittently under Section 825.50. If the employer refuses to approve the request, leave may not be taken intermittently.

4.) Documentation Timing Clarified. Initially, the DOL indicated that employees must provide the required documentation prior to taking leave. The revision clarifies this point, and establishes that employees must merely provide required documentation as soon as practicable.

Potential Pay-Day for Student-Athletes: Proposed Revisions to the NCAA Name Image and Likeness ("NIL") Rules

14 Sep 2020 00:00:00 -0800

For years the NCAA has prohibited student-athletes from profiting from their name, image, and likeness (“NIL”). Examples of such prohibited activities include, but are not limited to, signing autographs, personal appearances, promoting a business, social media endorsements, and representations in video games. But, student-athletes may soon be able to profit from their NIL. The NCAA has announced support for rule changes in each of the three NCAA divisions, which would allow student-athletes to receive compensation for third-party endorsements. Such rule revisions will change the landscape of college athletics as we know it and modernize the NCAA’s longstanding collegiate model prohibiting student-athletes from profiting from their NIL. In October of 2019, the NCAA governing body directed the NCAA’s three divisions to make changes to the rules to allow student-athletes to profit from their NIL. Since that time, the three NCAA divisions have been working on drafting legislation that will allow student-athletes to profit from their NIL, but the legislation must be consistent with the collegiate athletic model. For example, student-athletes can be compensated for third-party endorsements related to athletics, as long as there is no school or conference endorsement, no use of institutional trademarks/logos, and at no point can a school pay student-athletes for NIL activities. In addition, the NCAA governing board has stated that a student-athlete can’t be compensated for NIL activities by schools or boosters for recruiting purposes. Thus, while student-athletes will be able to profit from NIL activities, the NCAA will still have parameters in place to ensure any NIL activities are consistent with the collegiate model.

By the end of October 2020, each NCAA division shall have its final legislation drafted to update the NIL rules. In January 2021, each division will vote on the new NIL rules at the annual NCAA convention. Such legislation is proposed to go into effect at the start of the 2021-2022 academic school year. This means that student-athletes may be able to start profiting from NIL activities by the fall of 2021. The restrictions that will be placed on student-athletes NIL efforts will not be announced until the final legislation is voted on and approved by all three NCAA divisions in January of 2021.

Student-athletes and businesses will need assistance in navigating the NCAA rule changes and many other legal matters such as reviewing contracts, establishing LLCs, reviewing any tax implications, and several other business matters. Because athletic departments can have no involvement in student-athletes NIL activities, it is important to seek advice from someone qualified to handle NCAA NIL matters and the business activities that go along with such endeavors. The future of collegiate athletics is evolving and modernizing with the times and Breazeale, Sachse, and Wilson is ready to assist any business or student-athlete with their NIL activities.

Management Update Newsletter Volume 9, Issue 9

01 Sep 2020 00:00:00 -0800

DOL Issues Three New Q&A's Regarding FFCRA School Leave

28 Aug 2020 00:00:00 -0800

Those of you who are keeping up with the pronouncements of our federal government regarding an employer's obligations under the Families First Coronavirus Response Act are aware that there are still some questions outstanding. Yesterday the DOL answered three of those questions when it issued Q&A's 98, 99 and 100. (You can find the Q&A's here https://protect-us.mimecast.com/s/_ACiCERPgZCW49OkTNCJIo?domain=dol.gov).

Specifically, the DOL indicated that:

98. If a child's school requires the child to alternate between in-person and remote-learning on a day-to-day basis, the parent is entitled to take FFCRA leave on the days that the child is required to remote-learn, assuming that other requirements of the Act are met.

99. If a school gives parents a choice between remote or in-person learning, the parent may not take FFCRA leave if they choose to have their child remote-learn, even if the parent did so out of fear that the child would contract COVID-19.

100. A parent may take FFCRA leave even if a school is utilizing remote-learning on a temporary basis and intends to open to in-person schooling in the near future.

None of these Answers prohibit an employer from allowing an employee to take leave when it is not required by the FFCRA. However, if an employer does so, it should not deduct that leave from the employee's FFCRA leave "bank" or utilize the tax deduction allowed by the FFCRA for that additional leave.

Be Careful If You Allow Employees to Give Paid Leave to Each Other

14 Aug 2020 00:00:00 -0800

Due to the pandemic some of your employees may have exhausted their paid leave and be in desperate need of more. Some of your other employees may have a surplus of accrued paid leave and want to assist their less-fortunate co-workers. While you can technically allow employees to “give” accrued paid leave to each other, the IRS says that you have to jump through some hoops if you don’t want the donor employees to take an unnecessary tax hit.

IRS Notice 2006-59 addresses this issue. You can find the Notice here: https://www.irs.gov/pub/irs-drop/n-06-59.pdf. The IRS also recently also published a brief Q&A addressing such plans related to the COVID-19 pandemic. You can find the Q&A here: https://www.irs.gov/newsroom/leave-sharing-plans-frequently-asked-questions

If the employer follows the IRS Notice, the employee who gives leave under such a plan will not have to include the donated leave in her income or wages. Conversely, the employee who receives the “given” paid leave will be taxed on the amount that she receives. Unfortunately, the employee giving the leave may not claim an expense, charitable contribution, or loss deduction for the amount of leave given. Please note that I said that this works “If the employer follows the IRS Notice.” If you fail to do so, your employees will face some unexpected taxes on the paid leave that they “gifted.”

I would recommend that you refer to Notice 2006-59 if you are considering implementing such a leave-sharing plan. I have summarized some of the key criteria below:

The plan must allow a leave donor to deposit accrued leave in an employer-sponsored leave bank for use by other employees who have been “adversely affected by a major disaster” as defined by the Notice.

The plan cannot allow a leave donor to deposit leave for transfer to a specific leave recipient. (This has been a major point of contention with the plans that I have assisted clients to implement. Most employees want to give leave to a particular co-worker, not to all eligible co-workers in general. Consider this before you spend your time and money drafting a plan.)

An employee cannot take more leave in a year than the maximum amount that she accrued in the year.

A leave recipient must use this leave for purposes related to the major disaster.

The plan must have a reasonable limit on the period of time that leave may be deposited and received from the bank.

A leave recipient cannot convert leave received into cash. (This is another common point of contention.)

The employer must make a reasonable determination, based on need, as to how much leave each approved leave recipient may receive under the leave-sharing plan. (Ouch! This will undoubtedly lead to cries of favoritism.)

Leave deposited on account of one major disaster may be used only for employees affected by that major disaster. (If you implement a plan for COVID-19, it could not also be used for our next hurricane.)

Unused leave must be returned to the donor.

Don’t hesitate to call me directly if you have any questions or would like assistance in drafting and implementing your own COVID-19 Leave Sharing Plan.

EPA Announces Major Changes In Oil and Gas Regulations

14 Aug 2020 00:00:00 -0800

With the election looming, EPA has finalized a three-year effort to revise, amend, or repeal the 2012 and 2016 new source performance standards regulating volatile organic compound and methane emissions from the oil and gas production, processing, and transmission and storage segments. EPA has issued two rules that make sweeping changes to these Obama-era regulations.

The 2012 rule established NSPS for VOC emissions from these three segments of the oil and natural gas industry. The 2016 rule established NSPS for the three segments for greenhouse gases in the form of limitations on methane. In the 2012 and 2016 rules, EPA interpreted the source category to also include the natural gas transmission and storage segment. Prior to that, it only had included the production and processing segments.

In the current rules, EPA takes aim at the expansion of regulation to the natural gas transmission and storage segment, the regulation of methane from all three segments, and numerous VOC requirements in the oil and gas production and processing segments. To accomplish this, EPA issued two rules. The Policy Rule addresses the regulation of the natural gas transmission and storage segment and the regulation of methane from all three segments. The Technical Rule addresses VOC requirements in the oil and gas production and processing segments.

The Policy Rule contains three main parts. First, it finalizes a proposed rule that the source category includes only the production and processing segments of the industry. EPA reviewed the original scope of the source category published in 1979 and found that it did not include this segment. Instead, the natural gas transmission and storage segment is its own source category. EPA explained that, under CAA Section 111, it can only list a source category for regulation by making a cause-or-contribute-significantly and endangerment finding, which EPA has never done. As a result, EPA rescinded the standards (VOC and methane) applicable to the transmission and storage segment of the industry.

Second, EPA rescinded the methane requirements of the NSPS applicable to sources in the production and processing segments. EPA concluded that the methane requirements are redundant with the existing NSPS for VOC and, thus, establish no additional health protections. EPA stated that rescinding the methane requirements while leaving the VOC emission requirements in place will not affect the amount of methane emission reductions.

Third, EPA included an interpretation of CAA Section 111 which requires thatEPA must make a finding that emissions of an air pollutant from the source category cause or contribute significantly to air pollution which may endanger public health or welfare prior to newly regulating any air pollutant that the EPA did not consider when initially regulating the source category. While seemingly innocuous, this interpretation would seemingly require a finding that methane would ‘cause or contribute’ prior to re-regulating methane from the transmission and storage segment, an unlikely finding under the current administration.

The Technical Rule is somewhat more straightforward and applies to existing requirements applicable in the oil and gas production and processing segments. In general, they address a range of technical and implementation issues in response to administrative petitions for reconsideration and other issues brought to EPA’s attention, including fugitive emissions requirements, provisions to apply for the use of an alternative means of emission limitation, pneumatic pump standards, storage vessel standard applicability determinations, and engineer certifications.

The Policy Rule is effective when published in the Federal Register and the Technical Rule is effective sixty days after publication. With the election pending, the provisions of the Congressional Review Act may play a role in the survival of the two rules. In general terms, the Act allows Congress to vote to disapprove of the regulation (thus preventing it from going into effect) within 60 days after Congress receives the rule.

Taken together, the two rules free the transmission and storage segment from NSPS regulation, establish a framework for regulating new source categories, and substantially revise existing regulations in the production and processing segments. However, it remains to be seen whether these rules will survive a change in administration.

New Payroll Tax Deferral

12 Aug 2020 00:00:00 -0800

On August 8, 2020, President Trump signed an Executive Order (“Order”) to defer the withholding, deposit, and payment of payroll taxes for individuals making less than $4,000 bi-weekly. The deferral period is from September 1 through December 31, 2020. There seems to be more questions than answers as we all await additional guidance.

One question is whether the Order is mandatory or discretionary for employers. The Order would require employers to re-program their payroll systems to withhold the proper amount of tax from employees’ paychecks before September 1, 2020.

Another question is whether employees will be required to pay back the payroll taxes that are deferred. The Order directs the Secretary of the Treasurer to determine how the deferred payroll taxes could be forgiven, but it would take Congress to pass legislation to forgive the payroll tax. Would the employer be liable for making payment of the tax if the employee cannot make payment for whatever reason?

Another question is how to calculate compensation on which the payroll tax is calculated. The Order says wages and compensation for employees qualify for deferral if less than $4,000 per bi-weekly pay-period but the Order does not define wages and compensation, or say whether that includes things like bonuses, commissions, or overtime hours. It also does not clarify what happens if the individual has more than one job.

The Order request that the Department of Treasury develop rules on the application of the Order, so hopefully there will be additional information or guidance on how the Order applies to employers and employees in the very near future.

Louisiana Main Street Recovery Fund: (More) Help is On the Way

10 Aug 2020 00:00:00 -0800

The Louisiana Main Street Recovery Fund was created by Act 311 of the Louisiana legislature and awards grants to Louisiana small businesses to assist in their recovery from the economic impacts of COVID-19. The Program is administered by the Louisiana Department of Treasury (John M. Schroder, State Treasurer). The maximum grant amount is $15,000. It is not a loan program – grant funds will not have to be repaid unless it is determined that the information contained within the application was false, fraudulent, or materially misleading.

The eligibility requirements for businesses are:

Domiciled in Louisiana as of March 1, 2020
Suffered an interruption of business
At least 50% owned by one or more Louisiana residents
Filed Louisiana taxes in 2018, or 2019, or will file taxes in 2020
Had no more than 50 full-time employees as of March 1, 2020
Have customers or employees visit a physical location
Are not part of a bigger business with more than 50 full-time workers
Does not exist for the purpose of advancing partisan political activity and does not directly lobby federal or state officials
Does not derive income from passive investments without active participation in business operations

Two (2) types of costs are considered when determining the grant amount: (i) Costs incurred to meet public health requirements, and (ii) Business interruption costs. All costs must be reasonable and necessary, have a business purpose, be an incurred expense prior to filing the grant application and within the program period of March 1, 2020 to November 4, 2020. No future expenses can be claimed. A few examples of allowable costs are: cleaning or disinfecting areas due to COVID-19, personal protective supplies for employees or customers, technology expenses to facilitate teleworking, mortgage interest, rent of existing business locations and equipment, lease costs of vehicles, employee payroll, utilities, supplies and insurance.

If a business has already received assistance from other government programs, that business can still be eligible for the grant program. Assistance previously received from other sources will be subtracted from your claimed amount on the grant. If a business has received PPP money, that business can still receive money from this program but not to the extent that the business is recovering for the same costs incurred. Additionally, an application for a business that received a PPP loan or EIDL may not have its application reviewed until after the first 21 days of the Program.

There is also a “QuickRelief” option that allows eligible applicants to receive grants up to $5,000 dollars on an expedited basis.

Applications can be submitted online at www.louisianamainstreet.com. A business can also determine eligibility by visiting www.louisianamainstreet.com/business-eligibility-quiz/.

New York Court Vacates Four Provisions of the FFCRA Final Rule

06 Aug 2020 00:00:00 -0800

Earlier this week a federal court in New York vacated four key provisions of the U.S. DOL’s Final Rule implementing the Families First Coronavirus Response Act.
In April, the State of New York sued the DOL claiming that the DOL had exceeded its statutory authority in a way that denied FFCRA leave to eligible employees. The District Court largely agreed with the state of New York and vacated four provisions of the DOL’s Final Rule. Specifically, the Court vacated the provisions:

That employees are only eligible for paid FFCRA leave where the employer had work available (This opens the door for furloughed and laid-off employees to make claims for FFCRA paid leave); This could be huge.
Defining healthcare providers that can be declared exempt from the protections of the FFCRA. (This would eliminate a health care provider’s ability to exempt it's employees from the FFCRA.);
That employees may only take intermittent leave for certain reasons if their employer consents. (This would allow employees to take intermittent leave to care for a child without employer permission.); and
That employees must provide documentation before taking FFCRA leave. (Employers would still be able to require documentation, just not before the employee began leave.)

Before you start pulling your hair out, we do not know if or how this ruling will impact those of us blessed to live and work in the Fifth Circuit. This ruling was issued by the United States District Court for the Southern District of New York. Rulings of this Court will ordinarily not be binding on the Federal Courts of Louisiana. However, we can expect similar suits to be filed in other jurisdictions. Of course, if you employ employees in the jurisdiction of the Southern District of New York, this ruling will be controlling if it stands.

It is very likely that the DOL will either appeal this judgment on you or amend its Final Rule in such a way to make it compliant with this ruling. In the meantime, employers should make themselves familiar with this ruling and determine what, if any, steps they should take. You can read the opinion here:

https://www.fmlainsights.com/wp content/uploads/sites/813/2020/08/State-of-NY-v.-USDOL.pdf

I will track the progress of this case through the inevitable appeals process and keep you informed. As always, call me if you have any questions.