On Friday, June 5, 2015, David Wild the Administrator of the Wage and Hour Division of the U.S. Dept. of Labor announced that his office would soon be issuing an “Administrator’s Interpretation” intended to “clarify” who qualifies as an independent contractor under the Fair Labor Standards Act. Mr. Wild said that the interpretation would contain a “very clear set of criteria” that would be complimentary to the “economic realities test” that federal courts continue to use in determining whether or not an individual qualifies as an independent contractor or employee.

Breazeale, Sachse & Wilson will track the progress of this interpretation and issue further updates as more information becomes available.

Employers often agree to continue an employee’s health insurance coverage as part of a separation agreement. While this seems like a good idea, it can create significant unintended liability.

The risk usually comes to light something along these lines. Most benefit plans have eligibility rules. Those rules often require that an employee work a certain number of hours or maintain their employment in order to be eligible to participate in the plan. Once the employee’s employment ceases or they no longer work the requisite number of hours, they lose their eligibility. If you promised to continue the employee’s coverage for several months after their employment ceases and your policy does not specifically provide for this situation, your carrier could either deny their claims made during that time if it realizes what you have done at the time, or if the carrier discovers this agreement at a later date, it could refund your premiums and demand that you refund the claims that it paid during this time. Neither of these are a good result for you. Continue reading “Why You Should Not Agree to Continue Health Insurance As Part of a Separation Agreement” →