Category Archives: Investing and fiduciary requirements

Connecticut becomes the first state to require employer funded paid sick leave for “service workers”

 Connecticut employers of 50 or more must now provide paid sick leave to “service workers” under controversial new legislation recently signed into law by Governor Daniel P. Malloy.


On June 8, 2011, Connecticut Governor Daniel P. Malloy signed potentially precedent setting legislation that could be the initial spark in a nationwide revolution. The new law, which goes into effect January 1, 2012, mandates that employers with 50 or more employees (in Connecticut) provide up to 40 hours of paid sick leave to their “service workers.” This includes individuals who work in service capacities in hospitals, restaurants, schools, and many more institutions, but excludes exempt employees (managers, professionals, computer professionals, and outside salespeople).

The covered service workers must receive one hour of paid sick leave for every 40 hours of work.  The pay rate during the sick leave should be equal to the greater of either the normal hourly wage for the service worker, or the statutory fair minimum wage rate. If the service workers’ hourly wage varies depending on the duties they performed, the “normal hourly wage” will mean the average hourly wage earned in the pay period prior to the one in which paid sick leave was used. Covered workers may only use paid sick leave after completing 680 hours of employment, unless the employer agrees to allow use before that time. Also, each worker must have worked an average of at least 10 hours per week for the employer in the most recent calendar quarter to use paid sick leave. Absent a more favorable company policy or agreement, the law provides that the employee may carry over up to 40 hours of unused sick leave from one calendar year to the next, and covered workers are limited to 40 hours of paid sick leave in any calendar year. 

This new law will permit service workers to use their accrued paid sick leave for their own illness, injury or health condition, or to care for the illness, injury or health condition of a spouse or child. Furthermore, medical diagnosis, treatment, and preventative medical care for the aforementioned are also included. Finally, the bill also permits the leave to be used for incidents relating to or resulting from domestic violence or sexual assault. Medical certification can be required in certain situations.

If the worker’s need to use paid sick leave is foreseeable, an employer can require advance notice of no more than 7 days. Otherwise, the employer can require only that the worker give notice of intention to take leave as soon as can reasonably be expected. Service workers are not entitled to payment for unused accrued sick leave upon termination of employment, unless that is promised via an employee policy or collective bargaining agreement. An employer is in compliance if it offers any other paid leave or combination of paid leave that may be used for the purposes described in the law. The term “other paid leave” includes, but is not restricted to, paid time off, paid vacation or personal days.

While the law does not prevent an employer from taking disciplinary action if a worker uses the leave fraudulently, the statute has stringent anti-retaliation provisions. In addition, the employer must provide notice at the time of hiring to each service worker of his or her right to paid sick leave, the amount of sick time he or she can use, and the manner in which it may be used. Also, the employer must inform the service worker that retaliation for using paid sick leave is prohibited, and that the service worker may file a complaint with the Labor Commissioner alleging employer violations of the law. An employer is in compliance with these notice provisions if it displays a poster in a conspicuous place, accessible to service workers, at its place of business, which contains the required information in both English and Spanish.

The Labor Commissioner has the authority to hold a hearing on employee complaints and impose a civil penalty of $500 for each violation against any employer in violation of the Act. The Labor Commissioner may also award the employee “all appropriate relief,” including payment for paid sick leave, reinstatement, back pay, and reestablishment of lost employee benefits.

The paid sick leave will begin accruing on January 1, 2012, or in the case of a worker hired after that date, on their initial date of employment. Covered Connecticut employers should be revamping their paid time off policies and preparing the requisite employee notice in the meantime.

This alert was co-authored by Darnell DeCausey.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

PPACA: Feds Give States More Time to Meet External Review Standards

Published 6/23/2011 
Federal regulators are pushing the deadline for state compliance with health insurance decision external review requirements back to Jan. 1, 2012.The U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services (HHS) have announced that change and other, related changes in the rules governing handling of internal claims and appeals and external review processes in a preliminary version of a final rule posted on the website of the Labor Department’s Employee Benefits Security Administration.

The rules apply to non-grandfathered group health plans, holders of individual health coverage and members of governmental health plans. Depending on how many insured and self-insured plans retain “grandfathered status,” the rules could apply to about 157 million U.S. residents.

Congress included new federal internal review and external appeals standards in the Patient Protection and Affordable Care Act of 2010 (PPACA), which was signed into law March 23, 2010.

Federal departments issued interim final regulations implementing the PPACA appeal review standards in July 2010, and the Labor Deaprtment put out a technical release that postponed the enforcement data for some of the standards in September 2010. The Labor Department then changed and extended the grace period rules in March.

The Labor Department now is joining with the Treasury Department ahd HHS to change the end of a state external review transition period that was created for states.

The new transition period will end Dec. 31, 2011, rather than July 1, 2011.

The change means that affected insurers and self-insured plans can use the relevant state external review process, rather than the federal review process, up until Jan. 1, 2012.

If a state has no external review process that meets interim federal standards, then affected insurers and self-insured plans in state can choose between using an external review process administered by HHS or a private, accredited independent review organization (IRO) process, officials say in the preamble to the proposed rule amendments.

In related news:

  • The Labor Department has published a guide for consumers showing that many states have failed to set up consumer assistance operations that can help guide patients through the appeals and review process.
  • The federal departments have eased health plan appeal and review consumer notice translation requirements, because of indications that take-up rates for translated materials have been low in California, a state that already has strict translation requirements. If a plan finds that 10% or more of the speakers of a language in a county it serves are unable to read English, it still must include a notice of availability of language services in that language in plan materials, but a plan now can meet the requirements by including a single-sentence notice for each target language in all materials distributed throughout the state.
  • The departments have eliminated a provision that could have required plans and insurers to “tag” non-English speaking enrollees, to ensure that those enrollees would always receive service in the preferred language.
  • A health insurer or health plan will not necessarily have to make urgent care decisions within 24 hours, if it accepts the provider’s definition of “urgent care,” but it must make urgent care decisions within 72 hours, and it must be able to make decisions more quickly “based on the medical exigencies involved,” officials say.

James Klein, president of the American Benefits Council, Washington, has put out a statement noting that the Obama administration has made some changes recommended by the council, such as adding a provision requiring that IRO reviews should focus on matters of medical judgment, rather than “any” adverse benefit determination.

“The proper role of independent review organizations is to resolve coverage disputes that sometimes involve complex questions such as whether a particular treatment is medically necessary,” Klein says in the statement. “But it certainly is not appropriate for these organizations to be making legal interpretations of the contractual terms of a health plan. The agencies got it right on this matter.”

PSNC 2011: Best Practices for 403(b) Plans

 June 24, 2011 ( – At the recent PLANSPONSOR National Conference, 403(b) plan sponsors heard what some peers are doing to best manage and administer their 403(b) programs.

Laurie Clemens, Director of Human Resources for Heritage Valley Health System, PLANSPONSOR’s 2011 Non-profit/403(b) Plan Sponsor of the Year (see 2011 Plan Sponsor of the Year: Heritage Valley Health System), discussed the massive education campaign that moved the System’s plan from a 53% participation rate to 82% in just four years. Clemens recommended partnering with plan providers and/or the adviser on education efforts and plan design.   

Chris Cannova, Director of Compensation & Benefits, Archdiocese of Chicago, adds that plan sponsors should make sure their providers and adviser know their business, not just the 403(b) market, but the particular market segment the sponsor is in.  

Concerning plan design, Clemens, as well as Cannova, are advocates for automatic enrollment as a tool for increasing employee participation in their programs.   

Jim Phillips, President of advisory firm Retirement Resources, provided conference attendees with a Best Practices checklist. He suggests starting with the basics, not only a mission statement for the plan, but identifying who are fiduciaries to the plan and what are their duties.  

According to Phillips, plan sponsors should also take inventory of their providers, what services they are offering and how they are paid, and whether current plan features meet the needs of the company and employees. Sponsors should also look at what capabilities their provider has that the plan is not using, and whether the current investment menu is suitable for employee demographics. Finally, when taking inventory, 403(b) plan sponsors should assess the state of retirement readiness of plan participants.  

After taking inventory, Phillips said, plan sponsors should honestly answer the questions, “Is our retirement plan successful,” and “Are there any changes that would likely improve results?”  

Audio of the panel discussion will soon be available at

Rebecca Moore

AARP’s Big Reversal: Social Security Cuts OK

Policy shift ‘like the Arctic icecap cracking’ says former Sen. Alan Simpson

Advisor One | June 20, 2011 | By John Sullivan, AdvisorOne

Former AARP CEO William Novelli in 2005 speaking out against cuts to Social Security. (Photo: AP)

Former AARP CEO William Novelli in 2005 speaking out against cuts to Social Security. (Photo: AP)

AARP, the powerful lobbying group for older Americans, is dropping its longstanding opposition to cutting Social Security benefits, a move that could rock Washington’s debate over how to revamp the nation’s entitlement programs.

The Wall Street Journal reported in a lengthy piece on Friday that the decision, which AARP hasn’t discussed publicly, came after a wrenching debate inside the organization. As the paper noted, in 2005, the last time Social Security was debated, AARP led the effort to kill President George W. Bush’s plan for partial privatization. AARP now has concluded that change is inevitable, and it wants to be at the table to try to minimize the pain.

“The ship was sailing. I wanted to be at the wheel when that happens,” John Rother (right), AARP’s long-time policy chief, told The Journal.

The shift has been vetted by AARP’s board and is now the group’s stance, and could have a dramatic effect on the debate surrounding the future of the federal safety net.

“If they come around and say they’re ready to do something, it will be like the Arctic icecap cracking,” former Sen. Alan Simpson, co-chairman of a White House commission on the deficit, told the paper.

At the same time, AARP runs the risk of alienating both its liberal allies, who have vowed to fight any benefit cuts, and its 37 million members, many of whom are deeply opposed to such a move.

Indeed, soon after the announcement, a handful of groups dedicated to preserving Social Security and other benefits for senior citizens sharply criticized AARP’s shift at a time when lawmakers are on the hunt for ways to save money as they negotiate over raising the debt ceiling and over reducing the nation’s debt.

“What AARP has done, in our opinion, in offering up Social Security benefit cuts in order to gain access to closed-door discussions, where let’s-make-a-deal politics has become the norm, is not the way to discuss strengthening a program that touches the lives of virtually every American family,” Max Richtman, acting chief executive of the National Committee to Preserve Social Security and Medicare, said in a conference call with reporters on Friday.

IMF Cuts U.S. Growth Estimate, Compares Debt Woes With Greece

Lender calls on Washington to enact entitlement and tax reform

Advisor One | June 17, 2011 | By Gil Weinreich, AdvisorOne

Jose Vinals (left), IMF's Financial Counselor and Director, speaking in April. (Photo: AP/Stephen Jaffe, IMF)

Jose Vinals (left), IMF’s Financial Counselor and Director, speaking in April. (Photo: AP/Stephen Jaffe, IMF)

The IMF has lowered its forecast for growth in the United States and called it critical that Washington get its budget act together. In its bimonthly World Economic Outlook, the global lender revised downward its estimate of U.S. GDP for 2011 to 2.5% from 2.8% in its April forecast; it cut its 2012 forecast to 2.7% from 2.9%.

The IMF made headlines in April when it chastised the U.S. for having no plan to deal with its debt. The Washington-based institution reiterated that warning in its current report, specifying that “it is critical to immediately address the debt ceiling and launch a deficit reduction plan that includes entitlement reform and revenue-raising tax reform.”

Speaking in Sao Paolo, Brazil, after the report was issued, Jose Vinals, IMF Financial Counselor and Director, is quoted by Reuters as saying: “If you make a list of the countries in the world that have the biggest homework in restoring their public finances to a reasonable situation in terms of debt levels, you find four countries: Greece, Ireland, Japan and the United States.”

The unflattering comparison comes as amorphous budget talks continue inconclusively in the Senate Budget Committee and among Vice President Biden’s Gang of Six. The former has been tinkering with the tax code, but no reports indicate wholesale entitlement reforms can be expected.

The Gang of Six talks have a goal of reducing the deficit by some $4 trillion over the next decade or more, which is not likely to satisfy the IMF critics. The U.S. national debt hovers over $14 trillion, which is nearly equal to the entire annual output of the U.S. economy.

Treasury Secretary Timothy Geithner has warned that the U.S. will run out of funding for current obligations if Congress fails to reach a budget agreement by August 2. Republicans in Congress are reluctant to raise the ceiling without first procuring substantial budget cuts. What remains to be seen is whether an agreement will materialize, and whether any ensuing plan has sufficient credibility to forestall the punishment of international credit markets.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck