Trends in Employment Law for 2010 and Beyond

By Ross I. Molho

At least two areas of the employment relationship are seeing increased regulation and scrutiny in 2010:

The COBRA Subsidy
COBRA is a federal statute that allows certain employees to continue being insured under their employer’s group health plan after their employment terminates. COBRA rights have been illusory, however, because terminated employees generally cannot afford the full premium for their health insurance. As a result, in February 2009 a 65% employer-paid COBRA subsidy was instituted as part of President Obama’s American Recovery and Reinvestment Act of 2009 (“ARRA”).

This subsidy originally applied to the period from September 1, 2008 through December 31, 2009, but was extended first through February 28, 2010, and again through March 31, 2010. The U.S. Senate recently voted to extend the subsidy a third time through December 31, 2010, which the House passed in December 2009. As President Obama is expected to sign this third extension into law, we believe the employer-paid COBRA subsidy will become a permanent entitlement.

Misclassification of Independent Contractors

Driven by a need for increased revenues, both the states and the federal government have been cracking down on employers who misclassify workers as independent contractors instead of employees. In fact, two branches of the federal government have targeted this issue with the hope of recouping more than $7 billion in taxes over the next 10 years.

As discussed in greater detail later in this issue, the IRS has commenced a highly publicized National Research Program that will audit 6,000 employers and will focus, in part, on worker classifications. Similarly, the 2011 Labor Department Budget adds $25 million to target misclassified workers. While properly classifying workers is beyond the scope of this article, almost every regulatory body views this issue based on who has “control” of how the work is performed.

Employment law continues to be Byzantine and complex, often leaving employers confused. CC&M’s approach, however, is simple: To help make our clients’ employment relationships positive and profitable.