Federal Agencies Announce Plan B for the Contraceptives MandateThe triumvirate of federal agencies (HHS, DOL, IRS) responsible for enforcing the Patient Protection and Affordable Care Act (the ACA, often called Obamacare) released final interim rules significantly expanding exceptions from what has become known as the “contraceptives mandate.” This mandate, which has been the subject of extensive and ongoing litigation and political debate, will now not apply to employers, group health plans, insurance issuers, and individuals who object to the mandate “based on sincerely held religious beliefs.” It will also not apply to nonprofits, closely held for-profit entities, and individuals who object “based on sincerely held moral convictions.”

What is the Contraceptives Mandate?

Under the ACA, employers, group health plans and insurance issuers must provide coverage without cost sharing for women’s preventative care and screenings. Under the Obama administration, the Health Resources and Services Administration interpreted this to require coverage for contraceptives, such as birth control medication. Originally, there was an exemption available only for nonprofit “religious employers” with religious objections to contraceptive coverage. The exemption was later expanded to “houses of worship and their integrated auxiliaries” and eventually to closely held, for-profit entities with similar religious objections, such as Hobby Lobby. See Burwell v. Hobby Lobby Stores, Inc.

What entities are eligible for the exception?

The entities who object to any involvement in the provision of coverage for contraceptives based on sincere religious beliefs or moral convictions (Objecting Entities) are excepted from the application of the contraceptives mandate. In regards to sincerely held religious beliefs, essentially all nongovernmental employers may be Objecting Entities. In regards to sincerely held moral convictions, only the following may be Objecting Entities: (1) a nonprofit organization, (2) a closely held for profit entity or (3) an institution of higher education in its arrangement of student health coverage. The agencies provide no guidance as to what it means to have sincere religious beliefs or moral convictions but explain that the mechanisms for making such determinations are a matter of “well-settled” state law.

Are there steps to becoming an Objecting Entity?

No. Entities claiming an exemption from the contraceptives mandate were previously required, in general, to seek an “accommodation” and provide certain notices. Now, there are no applicable certification or reporting requirements, although the accommodation process is still being made available on an optional basis.

If I become an Objecting Entity, can I just stop offering coverage for contraceptives?

No. Under ERISA, a group health plan will still be required to list contraceptives as specific exclusions from coverage and provide notices regarding the reduction in coverage to all persons covered under the plan.

If I am an employer or issuer, can I offer a plan that does not cover contraceptives?

Yes. Even governmental employers may do so. Even if an employer or issuer is not an Objecting Entity, one or more of its employees or covered individuals may be an “Objecting Individual” – that is, an individual who objects to coverage for contraceptives based on sincere religious beliefs or moral convictions. The regulations specifically allow for such “willing entities” to offer a separate plan or benefit package to Objecting Individuals that does not include coverage for contraceptives.

If I am an employer or issuer, do I have to offer a plan that does not cover contraceptives?

No. The preambles to the regulations provide that this “individual exemption” cannot be used to force an employer or issuer to provide coverage omitting contraceptives.

Will the regulations be challenged?

Yes. The regulations will almost certainly be immediately challenged on procedural grounds based on their adoption as “interim final rules,” which makes the regulations immediately effective and circumvents the notice and comment period required by the Administrative Procedures Act. Additionally, the substance of the regulations will undoubtedly be challenged in multiple ways, particularly where the exemption is provided based on “moral convictions.”

What Employers Can Expect from the New Administration – Part 2: Immigration, the Affordable Care Act & Social IssuesIn our second in a three-part series on what to expect from the Trump administration, we discuss immigration policy and the Affordable Care Act (ACA), as well as what may be in store for parental leave, marriage equality and transgender bathrooms.

1. Immigration

During the campaign, Mr. Trump signaled that his administration would take a tough stance on immigration, promising to “build a wall” along the U.S.-Mexican border and to deport millions of undocumented workers. Pinning down the details of the president elect’s immigration policy has proven to be somewhat elusive, however, and it is too early to make many hard and fast predictions.

That said, it is clear that Mr. Trump’s immigration agenda will significantly impact employers. For starters, we should expect a much more aggressive approach to workplace immigration compliance. Employers should anticipate that Form I-9 audits and investigations will be stepped up — so don’t forget to start using the new Form I-9 no later than January 22, 2017. Additionally, ICE may be given the green light to resume the high-profile worksite raids that were prevalent during the Bush era. The president elect has done little to assuage these kinds of concerns, proposing to hire hundreds of new ICE agents to ramp up the government’s immigration enforcement efforts.

Mr. Trump also has pledged to end the Deferred Action for Childhood Arrivals (DACA) initiative, which the Obama Administration rolled out in 2012. Under DACA (administered by USCIS), more than a half million young, undocumented aliens (the so-called “Dreamers”) have been shielded from deportation and provided legal work authorization. The new president could terminate the DACA program with the stroke of a pen, although his precise intentions are not clear. His options range from simply ordering USCIS not to accept or approve any new DACA applications to more drastic measures, such as revoking already approved DACA applications and work permits or (more drastic still) using the information previous DACA applicants provided to institute deportation proceedings against them. Recently, however, Mr. Trump suggested that his stance on DACA may be softening, stating that he may seek to “work something out” regarding the Dreamers. In addition, last week, a bipartisan bill designed to extend DACA’s protections and benefits for three years was introduced in Congress – although it’s certainly not clear that this legislation has the support needed for passage.

Other changes impacting employers may come later, through some form of immigration reform legislation. Mr. Trump has voiced support for mandating E-Verify for all employers, and it’s almost certain that any proposed legislation will include mandatory E-Verify. Additionally, some of the president-elect’s closest advisors have pressed for changes to the existing legal immigration landscape, including the visa programs commonly used to secure foreign talent. Some of those within Mr. Trump’s inner circle have been particularly critical of the H-1B program for temporary “specialty occupation” workers and have floated proposals designed to make the use of that program more difficult, such as increasing the wage requirements and instituting a labor market test. During the campaign, however, the president-elect was more equivocal about these legal immigration programs, sometimes making remarks that seemed contradictory. At this point, it is not possible to predict how these issues will shake out, but employers certainly need to stay tuned.

2. Affordable Care Act

During the campaign, Mr. Trump consistently stated that he would repeal and replace the Affordable Care Act (ACA). In recent interviews following the election, the president elect has indicated that he would consider keeping certain popular provisions of the Act, such as those preventing pre-existing condition limitations and those allowing coverage of adult children to age 26. These provisions are also generally popular among members of Congress and will likely remain in place. Congress likely will eliminate other aspects of the ACA, such as the employer mandate and the penalties for not offering or providing insurance coverage to employees. A guiding principle for designing a replacement plan could involve encouraging insurance industry competition through mechanisms such as Mr. Trump’s proposal to allow insurance companies to compete across state lines. He has also proposed a few means for reducing the costs of health insurance, including allowing the full deduction of health insurance premiums from taxes and expanding the availability of health savings accounts. In sum, developing and maintaining a system that includes certain popular reforms without coverage mandates will be a challenging task, and it is quite possible that the transition out of the ACA will take a few years.

3. Social Issues Such as Parental Leave, Marriage Equality, and Transgender Bathrooms

Mr. Trump has commented about many other issues that could affect employment policies. During his campaign, he proposed a parental leave policy requiring six weeks of paid leave for mothers following childbirth. This policy would not apply to fathers or to parents who welcome children through adoption or surrogacy. As part of the policy, Mr. Trump has suggested a tax deduction to employed individuals for care expenses for up to four children and elderly dependents.

With respect to same-sex marriage, employers should not expect White House efforts to disturb the Supreme Court’s 2015 Obergefell decision legalizing same-sex marriage. While Mr. Trump did not spend much campaign time discussing LGBT rights, in a recent 60 Minutes interview the president-elect said he did not have a problem with same-sex marriage and felt that the Obergefell decision was settled law, rendering it a non-issue.

Mr. Trump has flip-flopped on the issue of transgender bathroom policy. In the Spring of 2016, Mr. Trump said that he thought that transgender individuals should be able to use whatever bathroom they preferred. Later, however, he criticized President Obama’s executive order requiring public schools to allow transgender students to use the opposite sex’s bathroom and said he thought that individual states should make those decisions. Several weeks ago, the Supreme Court granted certiorari to review a lawsuit that would test the validity of the executive order on transgender bathrooms. If the new president rescinds the executive order, this could moot the case or require the Supreme Court to remand it to the Fourth Circuit for reconsideration.

Stay tuned for our next blog post in this series about expected judicial appointments and future rulings on several employment-related cases. If you have specific concerns or questions, please contact one of the attorneys in Bradley’s Labor and Employment Practice.

Couple discussing home economicsWith relatively few exceptions, administrators of employee benefit plans covered by the Employee Retirement Income Security Act (ERISA) have enjoyed success enforcing forum selection clauses in cases across the country. As such, employers should consider implementing a forum selection clause in their plans like the following:

Restriction on Venue. A participant or beneficiary shall only bring an action in connection with the Plan in the United States District Court in the [Federal District where administrator is located] of [State].

This simple provision should promote significant cost savings and enhance uniformity and predictability for administrators defending plan-related claims in federal court. For example, an employer headquartered in New York may have employees in Florida and Alaska that participate in the employer’s plan. Without a forum selection clause, ERISA’s default venue provision probably permits participants to bring their plan-related lawsuits in Florida or Alaska. Some actions could also be brought in a state court, depending on the claim. Having to defend lawsuits in other states would not only increase defense expenses, but also possibly lead to different results on the same issues due to differences among federal or state courts. With a forum selection clause in place, the administrator (usually the employer) could instead require that all plan-related claims be brought exclusively in a specific federal district court.

Sound too good to be true? While the Department of Labor certainly thinks so, at least 20 federal district courts, one or two federal circuit courts of appeal, and perhaps even the U.S. Supreme Court have given their blessing to forum selection clauses in ERISA Plans. In 2014, the Sixth Circuit Court of Appeals unequivocally approved a forum selection clause identical to the one described above in Smith v. Aegon Cos. Pension Plan, 769 F.3d 922 (2014)—a decision that the Supreme Court refused to reconsider earlier this year, 136 S. Ct. 791 (2016). More recently, the Eighth Circuit Court of Appeals appeared to join the Sixth Circuit when it declined to reconsider a lower court’s order enforcing the forum selection provision in In re: Lorna Clause, 8th Cir., No. 16-2607, petition for writ of mandamus denied Sept. 27, 2016.

While the success ERISA plans have enjoyed enforcing forum selection clauses in federal courts is impressive, it is not absolute. So far, four federal district courts (Northern District of Illinois (2), District of Maine, and Eastern District of Texas) have refused to enforce forum selection clauses on the theory that they violate ERISA’s venue provision and/or the underlying public policy goals of ERISA.

Therefore, administrators should bear in mind that, at least for now, some federal district courts may not enforce a forum selection clause in an ERISA plan. However, administrators should be equally mindful of the fact that the consequences of an unenforced forum selection clause are the same as not having one in the first place.

If you have any questions about forum selection clauses in ERISA plans, please contact one of the attorneys in the Employee Benefits & Executive Compensation Practice Group at Bradley.

This post was first published as an Employee Benefits alert on November 8, 2016.