Recent Legislative, Judicial and Administrative Developments Bring New Challenges and Opportunities For Employers

August 22, 2007

Recent Legislative, Judicial and Administrative Developments
Bring New Challenges and Opportunities For Employers

Massachusetts Health Care Reform: Important Update on Recent Changes
Many issues relating to the Massachusetts Health Care Reform law are still being resolved, even though the law went into effect on July 1, 2007.  There are provisions that affect all Massachusetts employers, including those that have traditionally offered health care insurance.  For more information on these changes, please scroll down.

ERISA Pre-empts Employee’s Claim for Sexual Orientation Discrimination
In a recent decision by the United States District Court for the District of Massachusetts, the Court (Tauro, J.) ruled that an unmarried male employee was not entitled to health care benefits for his female partner even where his employer provided partnership benefits to same-sex couples.  On June 25, 2007, the Court held that ERISA pre-empted the state law prohibition against sexual orientation discrimination.  The decision is Partners HealthCare System, Inc. v. Sullivan (C.A. No. 06-11436-JLT) (D. Mass. 2007). 

EEOC Guidance on Treatment of Workers with Caregiving Responsibilities
On May 23, 2007, the EEOC issued guidance about avoiding Title VII liability for the disparate treatment of workers with childcare responsibilities.  The EEOC points out that while federal anti-discrimination law does not prohibit discrimination against caregivers per se, employers may still run afoul of anti-discrimination laws.  The EEOC sets out 20 scenarios that could constitute discrimination and provides guidance for employers.  The document is entitled “Enforcement Guidance: Unlawful Disparate Treatment of Workers with Caregiving Responsibilities,” and is available on the EEOC website at

Legislation To Watch For: Electronic Employment Verification
A variety of legislation is making its way through Congress that, if passed, would increase employers’ obligations to verify the eligibility of workers and impose penalties on employers that hire or continue to employ unauthorized workers.  Critics point out that electronic verification systems would impose costly compliance and record-keeping obligations on employers, and would create risks of unauthorized disclosure, fraud and other abuse. 

Massachusetts Health Care Reform: Important Update on Recent Changes
Even as the Massachusetts Health Care Reform law is being implemented, the Commonwealth Health Insurance Connector Authority (the “Connector”), the newly created administrative authority charged with implementing the law, continues to issue administrative bulletins changing some of the deadlines and responsibilities of employers. It has also released handbooks that are useful guides for employers seeking information on compliance. 

On June 29, 2007, the Connector issued a Bulletin (02-07) that postponed from July 1, 2007 to October 1, 2007 the deadline by which employers must file a copy of their Section 125 Plan(s) with the Connector.  Employers must wait until September 1, 2007 to file such plans, unless otherwise specifically directed by the Connector.

The Bulletin also includes a revised definition of employee pursuant to 956 CMR 4.04.  Under the new definition, individuals are considered employees regardless of whether they are Massachusetts residents, although the definition excludes those who have been employed for less than one month. 

The Bulletin also provides guidance on how employers should determine which employees may be excluded from eligibility for a Section 125 Plan.  Of particular note for employers in the service industry is that when determining whether an individual’s wages exceed $400 per month, the minimum for required participation in the Section 125 Plan, the employer should not include tips or gratuities of any kind and should only look at regular payroll wages. 

Employers who already have Section 125 Plans in place should be reminded that in addition to establishing or maintaining such plans, the new law imposes a number of administrative responsibilities on the employer, such as obtaining from each employee a signed Employee Health Insurance Responsibility Disclosure (“HIRD”) form.  The details of those requirements are contained in the “Section 125 Plan Handbook for Employers,” which can be downloaded from the Connector’s website ( 

The Massachusetts Health Care Reform Act also imposes a number of requirements that affect employers generally.  As of July 1, 2007, health insurance companies are precluded from offering group health plans to Massachusetts employers that discriminate against lower-paid full-time employees in establishing the percentage of the employer contribution toward coverage.  Thus, employers who have existing policies of paying a greater percentage of the health care premiums of their higher-paid executives must change their practices.  It is permissible, however, for an employer to offer different types of plans and pay different percentages of the cost of each plan, provided that lower-paid employees have the same opportunity as higher-paid employees to select plans toward which the employer pays a higher percentage of costs. 

Employers should also note that the new health care law explicitly prohibits employers from discriminating against employees who have received free care, reported the employer’s identity, completed a HIRD form or taken any other action that could subject the employer to a free rider surcharge.

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