The May 15 changes were necessary because of the ADA Amendments Act, which expanded the law’s coverage in 2009, the U.S said in a press release.

The documents explain how ADA applies to applicants and employees with cancer, diabetes, epilepsy and intellectual disabilities. The amendments made it easier to conclude that individuals with those impairments — and many others — are entitled to ADA’s protections, the commission explained.

The guidance documents also describe when an employer may obtain medical information from applicants and employees; what types of reasonable accommodations individuals with these particular disabilities might need; how an employer should handle safety concerns; and what an employer should do to prevent and correct disability-based harassment, according to EEOC. 

These guidance documents for these specific conditions were chosen for revision because “[n]early 34 million Americans have been diagnosed with cancer, diabetes, or epilepsy, and more than two million have an intellectual disability,” EEOC Chair Jacqueline A. Berrien said in a statement. “While there is a considerable amount of general information available about the ADA, the EEOC often is asked questions about how the ADA applies to these conditions.”

The documents revised are:

• Questions & Answers about Cancer in the Workplace and the Americans with Disabilities Act;
• Questions & Answers about Diabetes in the Workplace and the Americans with Disabilities Act;
• Questions & Answers about Epilepsy in the Workplace and the Americans with Disabilities Act; and
• Questions & Answers about Persons with Intellectual Disabilities in the Workplace and the Americans with Disabilities Act.

Visit the HR Compliance Expert for more on ADA compliance.

A jury on May 2 awarded $240 million to 32 men with intellectual disabilities for severe abuse and disability discrimination. The jury which heard Equal Employment Opportunity Commission v. Hill Country Farms, Inc. in the U.S. District Court for the Southern District of Iowa, found that Hill County Farms, doing business as Henry’s Turkey Service, abused employees at two turkey processing plants in Iowa.

The verdict followed a September 2012 order from the court that Henry’s Turkey pay the men $1.3 million for unlawful disability-based　wage discrimination.

The May 2 jury awarded each of the men $2 million in punitive damages and $5.5 million in compensatory damages, bringing the total judgment against the defunct company to $241.3 million.

EEOC presented evidence that the workers were subject to abusive verbal and physical harassment by the owners and staff of Henry’s Turkey. In addition, EEOC said the company restricted the men’s freedom of movement and imposed other harsh terms and conditions of employment such as requiring them to live in sub-standard living conditions. EEOC also said the company failed to provide adequate medical care when needed.

Such abuse violated the Americans with Disabilities Act, which prohibits discrimination based on disability, including intellectual disabilities, in terms and conditions of employment and wages, and bars disability-based harassment. EEOC said it filed the lawsuit (No. 3:11-cv-00041-CRW -TJS) after first attempting to settle the case through its conciliation process.

Because the award had to be reduced, EEOC requested that the district court judge award each worker the statutory maximum: $50,000. Henry’s suggested the same.

Compensatory and punitive damages are capped at different levels, depending on the size of the employer’s workforce. In this case, the company employed fewer than 100 employees, so each complainant can only receive $50,000. Companies with more than 501 may be liable for up to $300,000 for each worker involved (see ¶264 of the Guide).

EEOC and Henry’s suggestions still must be approved by a court.

Learn more about ADA enforcement at HR Compliance Expert.

A study by money manager Vanguard predicts, based on its own participation figures, that 55 percent of all participants and 80 percent of new entrants will be invested in such a professionally managed option by 2017.

TDFs usually are named for the year a participant plans to retire and leave the workforce. The funds gradually shift emphasis from more aggressive investments, primarily equities, to more conservative ones, based on this target date.

If you’re thinking about adding a TDF option for the first time, or if you’re seeking justification to propose to your plan committee adding even more of these menu choices, Vanguard’s recently released data on which 2012 participants used TDFs and why may be useful.

“Target-Date Fund Adoption in 2012” makes tangible TDFs’ rapid growth and ubiquity, using statistics from 3.2 million unique participants with 3.4 million accounts at 2,000 DC plans Vanguard administers. Among its findings, the February 2013 report showed:

• 84 percent of plans administered by Vanguard (which tend to be larger-asset plans) offered a TDF, jumping from 13 percent in 2004;
• 27 percent of Vanguard participants were completely invested in a single TDF, a percentage that’s up threefold over the last five years;
• half of all participants in the study had a position in TDFs; and
• funds in Vanguard TDFs accounted for 31 percent of total plan contributions.

Who’s in, and How They Got There

The Vanguard report on 2012 said that on average, 46 percent of account balances were invested in TDFs, indicating that not all participants are placing their assets in these funds alone. But at the same time, 72 percent of their 2012 total contributions were directed to Vanguard’s TDFs. The report identifies two types of TDF participants: “pure investors” who hold all their assets in a single TDF (these accounted for 54 percent of TDF investors) and “mixed investors,” the remainder who hold a TDF along with other investments or, rarely, multiple TDFs.

One important effect of increased TDF adoption is how it’s reshaping participant portfolios, according to Vanguard. “One of the benefits of TDFs is that they eliminate extreme equity allocations,” the report said. So high-risk portfolios containing only equities (14 percent of non-TDF investors in this study) or lower-growth models with no equities (11 percent) become the exception to the rule.

“By design, the funds lead to a disciplined approach to portfolio risk-taking, with risk levels falling as a participant ages,” the Vanguard report concluded. “For these reasons, their adoption is likely to continue to rise in the coming years.”

Finding out More

To read the complete story on Thompson’s HR Compliance Expert, click here.

For further information on using TDFs as an automatic enrollment QDIA, see ¶111 in The 401(k) Handbook.

The U.S. Equal Employment Opportunity Commission, which is tasked with enforcing GINA, filed suit against Fabricut, Inc., a fabric distributor. EEOC alleged that the company: (1) violated the ADA when it refused to hire a woman as a memo clerk because it regarded her as having carpal tunnel syndrome; and (2) violated GINA when it asked for her family medical history in its post-offer medical examination.

The employee in question, Rhonda Jones, worked as a temporary clerk for Fabricut. When her temporary assignment was ending, she applied for a permanent position.

Fabricut made Jones an offer and sent her to its contract medical examiner for a pre-employment drug test and physical, according to EEOC. At the exam, she was required to fill out a questionnaire and disclose disorders in her family medical history. The questionnaire asked about the existence of heart disease, hypertension, cancer, tuberculosis, diabetes, arthritis and “mental disorders” in her family. After the exam, the examiner concluded that further evaluation was needed to determine whether Jones had carpal tunnel syndrome.

Fabricut told Jones she needed to be evaluated by her personal physician and to provide the company with the results. Her doctor informed the employer that Jones did not have carpal tunnel syndrome. Despite the letter, the company rescinded its job offer. According to EEOC, Jones urged the employer to reconsider but it refused.

In addition to the monetary settlement, Fabricut will distribute nondiscrimination policies to employees and provide anti-discrimination training to employees with hiring responsibilities.

“Although GINA has been law since 2009, many employers still do not understand that requesting family medical history, even through a contracted medical examiner, violates this law,” Barbara Seely, a regional attorney with EEOC, in a press release.

David Lopez, EEOC’s general counsel, reminded employers that the commission considers GINA enforcement a priority. “When illegal questions are required as part of the hiring process, the EEOC will be vigilant to ensure that no one be denied a job on a prohibited basis,” he said.

To read the whole story and to read about other GINA issues, see  HR Compliance Expert.

In the recently released advance notice of proposed rulemaking, EBSA is proposing that a participant’s accrued benefits:

1. be expressed on his or her pension benefit statement as both a current account balance and an estimated lifetime stream of payments; and
2. be projected to his or her retirement date and then converted to and stated as an estimated lifetime stream of payments.

Attendees and panel speakers at Employee Benefit Research Institute’s Policy Forum on May 9 in Washington, D.C., said DOL was taking a step in the right direction by drawing up guidelines for ways plan sponsors can show participants how their current and future retirement savings will shape their future income stream. But among the questions the organization’s leader posed was whether the proposal’s longevity projections were too short.

Some Assumptions Questioned

EBRI CEO and President Dallas Salisbury told the gathering that “people with very long lives may run out of money” using the new document’s assumptions unless they purchase an annuity to supplement their retirement savings. (In converting account balances into lifetime income streams, the factors the proposed calculator uses include a unisex mortality rate from Code Section 417(e).) Salisbury also was critical of the fact that the proposal seems to assume purchase of a lifetime annuity, which isn’t yet common for most plan participants and retirees in the United States.

Another EBRI staff member, Research Director Jack VanDerhei, pointed out that the modest proposed participant contribution rate increase of 3 percent a year supplied in the ANPRM could prove to be an example of the “undesirable freezing effect” that regulation can have if it leads most participants to limit their savings to that amount. However, he said it was likely DOL chose that contribution level to encourage saving by workers with lower incomes and retirement balances who use the proposed lifetime income calculator. Modeling a higher average contribution would be “so demoralizing” for those who couldn’t match such a goal, he suggested.

Other presenters at the forum advocated plan sponsors recommending employee contribution rates of 10 percent to 15 percent of annual income.

Finding out More

To read the complete story on Thompson’s HR Compliance Expert, click here.

More information on retirement plan administration can be found in The 401(k) Plan Handbook.

In White v. Marshall & Ilsley No. 11-2660, (7th Cir., April 19, 2013), the presumption-of-prudence defense again was upheld when retirement-plan participant plaintiffs appealed a 2011 district-court ruling, 2011 WL 2471736 (E.D. Wis. June 21, 2011), based on this principle. That court found that the plaintiffs’ allegation of fiduciary breach by Marshall & Ilsley for offering company stock as a retirement investment option — despite its poor performance amid the 2008-2009 market collapse — couldn’t overcome the presumption of prudence, and it granted M&I Bank’s motion to dismiss the case.

M&I Bank offered its employees an individual account retirement savings plan that allowed them to choose how to distribute their savings among more than 20 investment funds with different risk and reward profiles that M&I plan fiduciaries selected. The company’s plan document described the investment options. During the housing market collapse that led to a broader stock market crash starting in late 2008, M&I’s stock price lost more than half its value. ERISA places a duty of prudence on plan fiduciaries when it comes to investment menus.

In the appeals hearing, the 7th Circuit judges sided with the defendant, citing a raft of case law opposing the idea that offering company stock as an investment option for plan participants is an ERISA violation, regardless of the stock’s market return. As the 7th Circuit judges wrote in their decision on White, “ [t]he theory also seems to be based often on the untenable premise that employers and plan fiduciaries have a fiduciary duty either to outsmart the stock market, which is groundless, or to use insider information for the benefit of employees, which would violate federal securities laws.”

The decision underscores consistent judicial support for offering company stock as a menu choice for participants’ defined contribution investing, as long as the fund is outlined in the sponsor’s plan document and is optional. With that in mind, plan sponsors need not shy from considering this option when creating or adjusting investment menus.

Finding out More

To read the complete story on Thompson’s HR Compliance Expert, click here.

To find out more about including company stock in retirement savings investment menus, see Section 411 in The 401(k) Handbook.

In Knutson v. Schwan’s Home Service, Inc., No. 12-2240, (April 3, 2013), the U.S. 8th Circuit accepted the employer’s written job description as evidence that it was “essential” for dock managers to receive U.S. Department of Transportation driving certification, even though driving isn’t part of a manager’s regular duties.

Facts of the Case

Jeffrey D. Knutson worked for Schwan’s Home Service, Inc. as a general manager of a delivery truck depot. Schwan’s delivers frozen food to homes and offices. Managers’ job descriptions require them to “meet the Federal Department of Transportation eligibility requirements, including appropriate driver’s license and corresponding medical certification.”

Knutson occasionally drove trucks to train new drivers, but last did so in November 2007.

In March 2008, he suffered an eye injury that required surgery. Upon returning to work, he was required to complete a fitness-for-duty exam. He failed the exam and Schwan’s placed him on leave. The employer gave him 30 days to obtain recertification or earn a job at Schwan’s that did not require DOT certification. He failed to do either and was fired.

He sued, alleging disability discrimination, but the U.S. District Court for the District of Minnesota granted summary judgment for Schwan’s, finding that Knutson was no longer qualified for the manager’s position.

Qualified Individual

To succeed on an ADA claim, an employee must show that he is a qualified individual. To do that, Knutson must be able to perform the essential functions of his job with or without accommodation. EEOC regulations define essential functions as “the fundamental job duties of the employment position” (29 C.F.R. §1630.2).

In the 8th Circuit, other factors to consider in the essential function determination include: (1) the employer’s judgment as to which functions are essential; (2) written job descriptions prepared before advertising or interviewing applicants for the job; (3) the amount of time spent on the job performing the function; (4) the consequences of not requiring the incumbent to perform the function; and (5) the current work experience of incumbents in similar jobs, the court said, citing Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 786 (8th Cir. 2004).

On appeal, Knutson argued that being certified to drive a delivery truck was not an essential function of his position because he had managed the depot successfully without driving.

Schwan’s countered that managers must be able to drive delivery trucks in case they are needed to deliver products or train new employees.

8th Circuit:  Employee’s experience inconsequential

The court said that the employer’s judgment was entitled to deference. Knutson’s “specific personal experience is of no consequence in the essential functions equation,” the court said. “Instead, it is the written job description, the employer’s judgment, and the experience and expectations of all [managers] generally [that] establish the essential functions of the job.”

Because Knutson was not qualified to perform an essential function of his job and there was no reasonable accommodation that would render him qualified, he was not entitled to ADA’s protections, the 8th Circuit ruled, upholding summary judgment for Schwan’s.

Read the full story here.

Determining hours worked and compensable time can be one of the FLSA’s most headache-inducing issues. Specific details can affect compensable time determinations, and the existing regulations and guidance seem to create greater confusion in some cases.

Compensable time issues continue to be litigated, including disputes involving time spent donning and doffing safety gear — an issue the U.S. Supreme Court is expected to address in the coming months. Some basic rules of thumb, however, can help employers sort through compensable time questions, and possibly evaluate if they need additional help before they run afoul of the FLSA’s provisions.

Generally, commuting time is not considered compensable. The Portal-to-Portal Act excludes time spent traveling to the location where an employee’s principal activity is performed from compensable time. However, time spent traveling for work purposes to other locations may be compensable depending on the circumstances.

The general rule is that employees should be compensated for all travel unless it is overnight and outside normal working hours and on a common carrier (plane, train, bus, etc.) and where no work is done. However, there are special rules for special situations. Travel time for out-of-town trips is complicated.

Disgruntled employees continue to file lawsuits dealing with compensable time against employers. Because the rules that determine whether a specific chunk of time spent by a specific employee can be complicated, employers might want to err on the side of caution and favor compensating employees for time spent traveling to far away trainings. However, if that is not an option, consulting an attorney to make sure your compensable time determination is correct may be the next best defense. At a bare minimum it is worth reviewing your time policies to guard against potentially expensive and prolonged litigation.

For more analysis of this and other compensable time questions, Thompson customers should consult HR Compliance Expert.

“We urge you to recognize the comprehensive regulatory framework that already exists” under HIPAA’s nondiscrimination rules, as amended by the Affordable Care Act, Tami Simon of Buck Consultants told the EEOC. Otherwise, wellness programs’ uncertain status under the Americans with Disabilities Act will discourage the implementation of programs that are clearly beneficial and would meet the detailed HIPAA and ACA standards, she said.

EEOC members acknowledged the need for additional guidance on wellness incentives, but no such clarification seems imminent. “It is the commission’s duty to let the regulated community and all stakeholders know what our positions are,” said Commissioner Victoria Lipnic. “We haven’t given that kind of certainty.” This meeting was called to gather input so the EEOC can craft such guidance, she said.

The ADA generally prohibits medical inquiries, but one exception is for “voluntary wellness programs.” But the EEOC, which enforces the ADA, has declined to specify whether and how great a financial incentive would render a program involuntary. Meanwhile, the three HIPAA agencies have forged ahead with detailed numerical thresholds and procedural safeguards against health-based discrimination.

In the ACA, Congress ratified and actually loosened the HIPAA standards for wellness programs, said Amy Moore, an attorney with Covington & Burling, on behalf of the ERISA Industry Committee.

“Since Congress has determined that an incentive up to 30 percent of the annual cost of coverage does not prevent a wellness program from being voluntary for purposes of HIPAA, the commission should acknowledge that the same incentive does not prevent a wellness program from being voluntary for purposes of the ADA,” Moore argued. “The Commission should also confirm that an incentive is permissible under the ADA regardless of whether it is presented as a reward or as a penalty.”

However, representatives of consumer groups, while agreeing on the need for more clarity, argued that the ADA’s “voluntariness” standard safeguards certain rights distinct from those contemplated by HIPAA or the ACA.

Programs that “penalize people with disabilities for not being as ‘well’ as others … make it even more difficult for individuals with disabilities to obtain employment on fair and equal terms,” said Jennifer Mathis on behalf of the Consortium for Citizens with Disabilities.” And an incentive that falls within the HIPAA/ACA thresholds can still end up penalizing an employee thousands of dollars a year for refusing to disclose information that the ADA entitles him or her to keep private, she said.

HIPAA, ADA and other rules that affect employee wellness programs are detailed in the Employer’s Guide to HIPAA.

Section 105 of ERISA requires defined contribution plan administrators to provide pension benefit statements to participants and certain beneficiaries at least annually (or quarterly if investments can be self-directed). Such statements must indicate the “total benefits accrued.”

Generally, DOL is proposing that a participant’s accrued benefits: (1) be expressed on his or her pension benefit statement as both a current account balance and an estimated lifetime stream of payments; and (2) be projected to his or her retirement date and then converted to and expressed as an estimated lifetime stream of payments. In developing ideas, DOL reviewed comments from a February 2010 request for information notice (See 75 Fed. Reg. 5253) and two September 2010 hearings. Here is what DOL is considering:

• Current balance. The statement would contain the individual’s current account balance, which also would be converted to an estimated lifetime income stream of payments based on reaching normal retirement age.
• Projected account balance. For participants not yet at normal retirement age, the statement would show the projected account balance, as well as the lifetime income stream it generates. The current balance would be projected to normal retirement age, based on assumed future contribution amounts and investment returns. The projected balance would be converted to an estimated lifetime income stream of payments, assuming that the person retires at normal retirement age.
• Lifetime income illustrations. Both lifetime income streams (that is, the ones based on current and projected balances) would be presented as estimated monthly payments based on the individual’s expected mortality. Joint lives would be presented in the lifetime income streams if the individual is married.
• Disclosures. The statements would contain: (1) an understandable explanation of the assumptions behind the illustrations; and (2) language explaining that projections and illustrations are estimates and not guarantees.
• Reasonableness standard. A general rule would be established that would allow a broad array of projection “best practices” to continue if such projections are: (1) based “on reasonable assumptions taking into account generally accepted investment theories”; and (2) are expressed in current dollars and takes into account future contributions and investment returns.
• Safe harbor. A safe harbor option would allow plan administrators to be certain they satisfied the primary elements of the general reasonableness rule. However, by establishing a specific set of assumptions for contributions, returns and inflation, this option would be narrower and more prescriptive.
• Annuitization approach. In expressing current and projected account balance as a lifetime stream of income, DOL is considering using an annuitization approach. Generally, this would express the benefit as a lifetime monthly payment to the participant similar in form to a pension payment made from a traditional defined benefit plan.
• Safe harbor mortality and interest rate assumptions. DOL agreed with many commenters that when a plan offers an annuityform of distribution, the actual mortality and interest rate provisions in the annuity contract should be reflected in the lifetime income illustrations. As such, that will be part of the proposed regulation. However, for plans that do not offer annuities, DOL is considering a safe harbor that generally would require illustrations to be based on “reasonable” mortality and interest rate assumptions “taking into account generally accepted actuarial principles.”

Comments on the ANPRM are due by July 8, and should be sent via E-ORI@dol.gov with RIN 1210-AB20 in the subject line of the message or to http://www.regulations.gov. They also can be mailed to the U.S. Department of Labor, Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5655, 200 Constitution Ave. NW, Washington, DC 20210, Attn: Pension Benefits Statement Project.

More information on retirement plan administration can be found in the 401(k) Plan Handbook and The 403(b)/457 Plan Requirements Handbook at http://hrcomplianceexpert.com.