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ERISA Perspectives
Perspectives on employee benefits, executive compensation and ERISA litigation to help you attract and retain talent.
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IRS Letter 226J: what about the constitutional due process hurdles to collecting employer shared responsibility excise taxes?

This month, the IRS quietly updated Frequently Asked Questions (FAQs) 55-58 regarding employer shared responsibility provisions under the Patient Protection and Affordable Care Act (PPACA) to explain how the IRS is going to start imposing employer shared responsibility excise taxes.

Given the Trump Administration’s opposition to PPACA, it is surprising that the IRS appears to be running ahead with collecting employer shared responsibility excise taxes. How and when did the IRS clear the constitutional due process hurdles?

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Cost of Living Adjustment to Employee Benefits Limitations

The IRS has announced cost of living adjustments to employee benefits limitations for 2018, including increasing the 401(k) elective deferral limit to $18,500 (plus $6,000 catch-up for those age 50 and older, plan permitting).

This chart summarizes some key limits:

COLA

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Recent Decisions Shine Light on Employer Liability for Data Breaches of Employee Personal Information

An employee improperly accesses his employer’s computer network and steals the names, birthdates, and social security numbers of his fellow employees to use for illegal financial gain. A criminal hacks into that same network for similar illegal purposes. Because employers regularly obtain, store, and use confidential employee personally identifiable information (“PII”) as part of their business operations, they are targets for this kind of activity. But what legal responsibility do employers have to their employees when PII is misappropriated by an employee, or stolen by hackers in a data breach?

Two Pennsylvania courts have recently shined some light on this issue. In both cases, which involved large-scale data breaches affecting thousands of employees, the courts absolved the employers of any potential liability because either (1) they owed no duty in tort to their employees to protect PII against data breaches or (2) the employer had no express or implied contractual obligation to protect the PII. See Enslin v. Coca-Cola Co. (E.D. Pa. Mar. 31, 2017)Dittman v. UPMC (Pa. Sup. Ct. Jan. 12, 2017), reargument denied Mar. 20, 2017.

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HIPAA Phase 2 Audits Are Here. Are You Ready?

Phase 2 of the U.S. Department of Health and Human Services Office for Civil Rights’ (“OCR”) HIPAA audit program is in process. Unlike OCR’s initial Phase 1 Pilot audits, which addressed only Covered Entities, Phase 2 also focuses on Business Associate compliance with HIPAA’s Privacy, Security, and Breach Notification Rules. 

These audits seek to enhance industry awareness of HIPAA compliance obligations and the information obtained will be used to develop OCR’s permanent audit program. All Covered Entities and Business Associates are eligible to be audited.

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Yahoo's data breach costs general counsel his job

Well this is unsettling – the person responsible for the massive data breaches at Yahoo was its general counsel? CorporateCounsel speculates about what this means for in-house counsel: are their jobs at risk over cybersecurity? And I wonder – what if a company does not have in-house counsel, or has turnover in IT? Who else will be held accountable for data breaches?

 

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ERISA Express Preemption Superpower Beats Iowa Pharmacy Benefits Manager Law

Last year, the U.S. Supreme Court gave ERISA’s express preemption provision back its superpower, in Gobeille v. Liberty Mutual Insurance Company.

This year, in Pharmaceutical Care Management Association v. Gerhart, the Eighth Circuit applied Gobeille to reverse the dismissal of the claims of the pharmacy benefits manager (“PBM”) association. Ruling in the association’s favor, the Court held that ERISA expressly preempts an Iowa law that imposes substantial regulations on PBMs operating in Iowa.

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Department of Labor's New Overtime Rule Blocked, For Now

Late yesterday, a federal judge in Texas issued a nationwide injunction and blocked the U.S. Department of Labor’s (DOL) new federal overtime rule from taking effect on December 1.

The new rule would have raised the minimum salary for most exempt employees from $23,660 to $47,476.

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Employee Benefit Plan Limits – Reference Chart for 2017 and Prior Cost-of-Living Adjustments

The Internal Revenue Code sets forth various dollar limitations on benefits, contributions, compensation under employee benefit plans.

The IRS has announced limits for 2017 tax years, with few changes from 2016. For your reference, the Summary of Employee Benefit Plan Limitations – 2017 summarizes these dollar limitations, as modified by the IRS for cost-of-living adjustments, for 2017 and prior years.

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SHRM Online Quotes Ann Caresani on Preapproved Retirement Plans

Tick tock: April 30, 2016 is the deadline for restatement of many retirement plans. If you maintain a defined contribution plan that was preapproved by the IRS and adopted before January 1, 2016, and you haven’t signed (or even seen) your restatement, you need to check with your document provider

If you maintain a plan and don’t know whether it falls within this category, we encourage you to ask the question. 

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Defined Benefit Pension Plans: Hungry Octopus Just Took a $4.5 Million Bite out of Private Equity (Sun Capital)

When asked to explain a defined benefit pension plan and its risks to a business owner or new potential investor, I compare it to the beautiful yet predatory octopus.  Octopuses are known for their intelligence, their ability to squeeze into small spaces, their ability to blend into their surroundings, their jet propulsion, and their ability to release a cloud of black ink that allows them to escape to live to see another day.

An octopus catches prey with its arms, and kills prey by biting it with its tough beak, paralyzing the prey with a nerve poison. As carnivores, they eat a variety of prey, even prey with very tough shells. A distressed octopus may eat its own arm.

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