Labor and Employment Alert July 2009
Anthony T. Bowser, Anne E. Zerbe
Pennsylvania Mini-COBRA
By: Attorney Anthony T. Bowser
On June 10, 2009, Governor Rendell signed House Bill 1089, PN 1573, Pennsylvania’s Mini-COBRA law. The law takes effect on July 10, 2009. Pennsylvania now joins the majority of other states in requiring small employers to offer health care continuation coverage similar to that required of larger employers under federal law. The Mini-COBRA law applies to companies with between two (2) and nineteen (19) employees on a typical business day during the preceding year. The law requires that employers that sponsor group medical insurance to offer employees and their dependents the opportunity to purchase up to nine months of medical continuation coverage upon a qualifying loss of medical coverage.
In many ways, the Mini-COBRA law is similar to the federal act. Employees and their dependents become eligible for continuation coverage upon a qualifying event. Qualifying events include:
- The death of a covered employee
- The termination, other than by reason of the employee’s gross misconduct, or reduction of the covered employee’s employment;
- The divorce or legal separation of the covered employee from an eligible dependent;
- The covered employee becoming entitled to benefits under Social Security;
- A dependent child ceasing to be a dependent child; and
- A proceeding in a case related to bankruptcy.
As with the changes to COBRA under the American Recovery and Reinvestment Act of 2009 (ARRA), employees covered by the Mini-COBRA law are eligible for premium assistance in the amount of sixty-five (65%) of their total premiums. The covered employee or eligible dependent must first contribute thirty-five (35%) of the premium costs.
The Mini-COBRA law differs from its federal counterpart in certain ways. First, the Mini-COBRA law applies to small employers, while only employers of twenty (20) or more are subject to the federal act. Second, the benefit period under Mini-COBRA is limited to nine (9) months, whereas individuals covered by the federal act are entitled to at least eighteen (18) months’ coverage. Third, Mini-COBRA applies only to group major medical, hospital and surgical policies, while the federal COBRA law applies to all ERISA group health plans, including dental, vision and prescription drug plans. Fourth, the Mini-COBRA law allows employers to charge up to 105% of the group insurance rate being continued, while the federal law allows a charge of up to 102%.
As with the federal COBRA law, the Mini-COBRA law requires a series of notices. The following notices must be provided within the prescribed time limits:
- An employer having a group policy must provide notice to each covered employee of the rights provided by the law within 45 days of its effective date.
- The employer of a covered employee under a group policy must notify the administrator or its designee, the covered employee and the insurer of a qualifying event within 30 days of the date of the qualifying event.
- Each covered employee or eligible dependent must notify the administrator or its designee of the covered employee’s or eligible dependent’s election of continuation coverage within 30 days after the date of the qualifying event.
- The insurer must be notified within fourteen days of the covered employee's or eligible dependent's election.
Given the effective date of July 10th, employers should act now to ensure compliance with the Mini-COBRA law. Companies that provide healthcare benefits and employ less than twenty-employees should contact their counsel and third-party administrators or insurers to ensure preparation and distribution of all required notices.
Age Discrimination – Burden of Proof In Favor of Employers
By: Attorney Anne E. Zerbe, SPHR and Summer Clerk Christopher Reed
The Age Discrimination in Employment Act of 1967 (ADEA) prohibits discrimination in any aspect of employment against individuals 40 years of age or older “because of age”. Under the ADEA, employers may not fail or refuse to hire an individual based on age, nor can they discharge an employee based on age. The ADEA also prohibits other adverse action against an employee or applicant based on age with regard to compensation, terms, conditions, privileges, opportunities, benefits and status of employment. The provisions of the ADEA are clear.
In recent years, however, confusion arose in the context of employees alleging “disparate treatment”, i.e., that the employee was treated differently on the basis of age. In these cases, employees allege that age was a factor in the employer’s adverse employment decision. The uncertainty surrounding the burden of proof in these cases was apparent from the courts’ mixed interpretations of the requirements of proof under the ADEA. On June 18, 2009, the Supreme Court provided clarification in Gross v. FBL Financial Services, Inc.. In that case, the Supreme Court held that an employee litigating a disparate treatment claim under the ADEA must prove that age was the cause of the adverse action and not merely a “motivating factor”.
Jack Gross filed suit in 2003 alleging that he was demoted by his employer, FBL, in violation of the ADEA. The district court found that FBL failed to provide evidence that Gross’ demotion would have occurred regardless of age and Gross was awarded lost compensation damages because age was a “motivating factor” of the demotion. FBL appealed, and the Eighth Circuit reversed the decision holding that Gross had failed to present sufficient evidence of direct discrimination based on age. Under the Eighth Circuit’s ruling, FBL was not required to prove the demotion would have occurred regardless of Gross’ age.
The Supreme Court held that employees must prove age was the “but-for” cause of an adverse employment action. The current ruling means that employees must prove that “age” was the reason the employer decided to take adverse action. The Supreme Court also held that an employer does not have to prove that the same action would have occurred regardless of age, even if an employee presents evidence that age was a “motivating factor.” The Court reasoned that, despite amendments to Title VII, which authorize discrimination claims when an improper consideration was a “motivating factor” in an adverse employment action, Congress did not amend the ADEA. Therefore, the ADEA requires an employee to prove that adverse action was because of age rather than the lesser standard of age being a “motivating factor.”
The Court’s ruling makes it easier for employers to defend against age discrimination claims because employees must now establish that their age was the cause of adverse employment action rather than a “motivating factor” in the decision. While this ruling helps employers in mixed motive cases, the majority of ADEA cases do not involve mixed motive analysis; therefore, the scope of the case may be narrow.
Further, the future of this employer-friendly ruling may be short-lived. The case was a 5-4 split decision with two justices vigorously dissenting and criticizing the “unnecessary lawmaking” of the majority.
The Supreme Court also opened the door for Congress to amend the ADEA by noting in its Opinion that Congress choose not to amend the ADEA as the basis for requiring employees to prove that age was the cause of the discriminatory decision. In the past, Congress responded to similar rulings with “corrective” legislation. For example, Congress responded to the Supreme Court’s Ledbetter decision by issuing the Lilly Ledbetter Fair Pay Restoration Act of 2009. In this climate of change, Congress may propose legislation to incorporate the language within Title VII to the ADEA.
With the growing number of age discrimination claims on the rise and an aging workforce, this decision may help employers defending mixed-motive cases. However, the strength and longevity of this ruling is short-lived. For more information regarding employment discrimination claims, please contact the Labor and Employment Law Group.
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