WISHA Amendment Impacts Washington Employers' Obligations to Correct Serious Safety Violations During Appeals
Washington employers appealing citations for serious safety violations are about to face a new element to the appeal process. An amendment to the Washington Industrial Safety and Health Act (“WISHA”), signed into law on April 15, 2011, will make it more difficult for employers to avoid immediate abatement of the underlying workplace hazard during the pendency of an appeal.
Under the current version of the statute, the requirement to correct a safety violation is stayed when the employer files a notice of appeal of the citation with the Department of Labor and Industries (“L&I”). Pursuant to the new amendment, an appeal of a citation involving a violation classified as “serious, willful, repeated serious violation, or failure to abate a serious violation” will no longer automatically stay the requirement to correct the underlying hazard. Instead, an employer who desires a stay under such circumstances must file a specific request for a stay of abatement requirements in connection with its notice of appeal.
In cases where L&I issues a redetermination decision regarding the substance of the appeal, it will simultaneously issue a decision regarding any request for a stay. L&I may grant the request unless it determines that the preliminary evidence shows a substantial probability of death or serious physical harm to workers if a stay is permitted.
Denial by L&I of an employer’s request for a stay can be appealed to the Board of Industrial Insurance Appeals (“BIIA”), which will employ an expedited review process regarding the request. Affected employees and their representatives will have the right to participate in that process. As with L&I’s redetermination decision, the BIIA will be statutorily required to deny the request if the preliminary evidence shows that it is more likely than not that a stay would result in death or serious physical harm to employees.
Employers appealing less serious safety citations will still be entitled to an automatic stay of abatement requirements during the appeal process, although many employers choose to voluntarily correct cited safety issues prior to resolution of an appeal. The amendment is scheduled to go into effect 90 days after the close of the legislative session.
Idaho Enacts Law Providing Tax Credits for Private Employers
On the final day of the sixty-first Legislature, Idaho lawmakers passed a bill which provides varying levels of tax credits for private employers who hire at least one employee after April 15, 2011. Governor Otter signed the legislation amending Idaho Code section 63-3029F on April 13.
In order to qualify for the credit, a newly hired employee must receive qualifying employer-provided health care benefits as determined by the Idaho State Tax Commission and be employed in a county within in the state of Idaho with an unemployment rate at or greater than the benchmarked annual employment rate as determined by the Department of Labor on the date the new employee was hired. That benchmark is either ten percent (10%) or more at average annual earnings of twelve dollars ($12.00) or more per hour, or less than ten percent (10%) at average annual earnings of fifteen dollars ($15.00) or more per hour. The available credit is not earned, however, until the new employee has worked for a minimum of nine consecutive months with any part of the qualifying period ending during the taxable year for which the credit is claimed. Additionally, the credit is not available when an employer acquires a trade or business or who operates in a place of business the same or substantially identical trade or business as operated by another qualifying business within the prior twelve months. Employees transferred from a related business shall also not be included in the computation of the credit.
The amount of the credit varies between 2-6% depending on how the employer is rated for unemployment tax purposes. Employers with a positive rating earn the highest amount of the credit while deficit rated business earn the lower amount. The credit is calculated based on the gross salary paid to the eligible new employee during the initial twelve months of employment and claimed during the qualifying taxable year.
The Tax Commission is charged with promulgating rules implementing the legislation. To claim the credit, rated employers must attach to the employer's income tax return the taxable wage rate notice issued by the department of labor for the income tax year for which the credit is claimed. An estimate of the financial impact from the Department of Labor and Division of Financial Management indicates that the legislation could draw $7.9 million per year from the general fund while generating $25.3 million in state tax revenue.
This legislation is very complex and may be difficult for employers to determine whether they may quality for the credit. If you have questions, please contact your attorney.
New IRS Guidance for Health Care Reform: More News You Can Use
Editor's Note: Today we are pleased to post the following health care reform update on new IRS guidance that came out last week. Many thanks to our Seattle employee benefits colleagues, authors Howard Bye, Melanie Curtice and Erin Lennon, for sharing this timely content with World of Employment.
Health care reform requires employers to report the cost of health coverage on employees’ W-2 forms. Last week, the IRS released additional information on this requirement, Notice 2011-28. Below is a summary of the additional information, including the effective date, how to calculate the cost of coverage, which benefits (e.g., vision, dental, FSA, HSA, HRA) to include in the calculation, and certain exceptions. The cost of health coverage is reported in Box 12 of the W-2 form, under code DD.
- Please note: The requirement to report the cost of the health coverage on an employee’s W-2 does not mean the value of the health coverage is included in the employee’s taxable income. The reporting requirement is for informational purposes only and the cost of the health coverage is not included in the employee’s taxable income.
Effective Date
As previously announced, the W-2 requirement was waived for 2011. The new guidance confirms that large employers (250+ employees) are not required to report the cost of health coverage on W-2 forms issued for 2011 (typically issued in January 2012). Large employers will need to report the cost of coverage on W-2 forms issued for 2012 (those issued in January 2013). Notably, the new guidance indicates that employers will not have to report the cost of coverage on interim W-2 forms requested by employees before the end of the calendar year. Therefore, the first time that employers are required to report the cost of health coverage is on the W-2 forms issued in January 2013 (for 2012 wages).
Calculating the Cost of Coverage
Employee Contributions Included: The reported cost of coverage includes both the amount paid by the employer and the amount paid by the employee. So, if an employer contributes $900/month for the employee’s coverage and the employee contributes $100/month for each month in a calendar year, the amount reported on the W-2 for the year is $12,000.
Cost of Dependent Coverage Included: The reported cost of coverage includes the cost of coverage for any other persons covered under the plan as a result of the relationship with the employee (e.g., spouse, children, domestic partner, etc.). So, if an employee elects family health coverage that costs a total of $2,000/month, the annual cost reported on the employee’s W-2 will be $24,000. If an employee changes coverage during the year (for example, adding a new dependent), the reported cost of coverage should reflect those changes. So, if an employee had self-only coverage for January through March, and then had a baby and switched to family coverage for April through December, the reported cost of coverage is the cost of the self-only coverage for three months plus the cost of family coverage for nine months.
Three Methods for Calculating Cost of Coverage: The guidance offers employers three options for calculating the cost of coverage. First, employers can simply use the same method used to calculate the COBRA premium (without including the additional two percent allowed under COBRA). Second, employers with insured plans can choose to use the premium charged by the insurer. The third option clarifies that employers who subsidize COBRA coverage must use the full, unsubsidized COBRA premium amount to calculate the cost.
- Note for self-funded plans: the guidance does not provide any additional guidance on how to properly compute COBRA premiums for self-funded plans. The Notice merely states that employers must continue to calculate the COBRA premiums “in good faith compliance with a reasonable interpretation” of COBRA.
Mid-Year COBRA Election
For employees that terminate mid-year and elect COBRA (or other continuation) coverage, the new guidance allows the employer to use “any reasonable method” of reporting the cost of coverage while the employee is on COBRA, as long as the method is used consistently for all employees on COBRA. The guidance gives two examples of reasonable methods: the employer can choose to report the cost of health coverage only when the employee was an active employee, or the employer can choose to also report the cost of health coverage when the employee was on COBRA.
Which Benefits to Include
- Vision/Dental: Vision and dental benefits should be included in the reported cost of coverage if they are “integrated” into the group health plan. Vision and dental benefits should not be included in the reported cost of coverage if they are provided under a separate policy, certificate or contract of insurance.
- Health Flexible Spending Accounts (FSAs): The amount contributed by an employee to a health FSA should not be included in the reported cost of coverage reported on the W-2. However, if an employer contributes money to the employee’s health FSA, the amount of the employer’s contributionshould be included. For employers offering flex credit or flex dollar programs, the reported cost of coverage is amount of employer flex dollars which the employee allocates to the health FSA (the total amount in the employee’s health FSA for the calendar year, minus the amount contributed by the employee through the employee’s payroll deduction).
- Health Savings Accounts (HSAs) and Archer MSAs: Amounts contributed to an HSA should not be included in the reported cost of coverage reported on the W-2.
- Health Reimbursement Arrangements (HRAs): Amounts contributed to an HRA should not be included in the reported cost of coverage reported on the W-2.
- Specific Disease Policies/Hospital or Other Fixed Indemnity Policies: These benefits (such as a cancer policy) are not included in the reported cost of coverage in most instances.
Current Exceptions
- Retirees: Employers do not have to report the cost of health care coverage for any individual for whom the employer does not have to issue a W-2. Therefore, employers do not have report health care coverage costs for retirees.
- Small Employers: Employers that are required to file fewer than 250 2011 Forms W-2 are exempt from the reporting requirement for 2011 and 2012 wages. Thus, the soonest a small employer could be subject to the reporting requirement is January 2014 (for 2013 wages).
- Multiemployer Plans: Employers that provide coverage to their employees through a multiemployer plan are not subject to the W-2 reporting requirement.
The IRS indicates that future guidance may change these requirements and exceptions, but no future guidance will take effect until the calendar year beginning at least six months after the new guidance is issued.
