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Employer Shared Responsibility Provision in the Affordable Care Act

December 17th, 2014

Under the Affordable Care Act, federal government, state government, insurers, employers and individuals are all given roles to improve the availability, quality and affordability of health insurance coverage in the United States.  Applicable Large Employers (ALEs) must adhere to the employer shared responsibility provision, known as the “employer mandate.”  Small businesses that have fewer than 50 workers are exempt from the employer responsibility provisions. As of January 1, 2015, employers with 100 or more full-time employees are ALEs and must offer minimum essential coverage to those employees and their dependants to age 26, or pay a penalty tax.  Beginning in January of 2016, the employee requirement is reduced to 50.  In addition, the coverage offered must be affordable and provide minimum value of coverage to full-time employees and their dependants to age 26.  Employers must offer the coverage to 70% of their full-time employees in 2015 and 95% in 2016 and beyond.

A full-time employee is an individual employed 30 or more hours per week on average.  Employers will determine yearly whether they will be considered an ALE by using the values from the prior year.  For example, an ALE determination for 2015 is based on 2014 employee numbers.  Coverage must be offered to employees and their dependants, and there is no requirement for spouses of employees to be offered coverage.

Minimum Essential Coverage

Minimum essential coverage is defined as most employer-sponsored coverage, including self-insured plans, or health coverage provided by the government.  Coverage that only provides limited benefits is not minimum essential coverage.  For example, Medicaid providing only family planning services, or coverage consisting solely of excepted benefits like worker’s compensation, is not minimum essential coverage.


The coverage is considered affordable when the employee’s share of the premium for the employer provided coverage for a single plan is less than 9.5% of that employee’s annual household income.  Because employers will not know their employees’ household incomes, three affordability safe harbors can be used to determine affordability.  If the employer meets the requirements of any of the following three safe harbors, the offer of coverage is considered affordable.

  1. Form W-2 wages – share of premium is less than 9.5% of employee’s W-2 wages
  2. Rate of pay – share of premium is less than 9.5% of employee’s monthly wages (lowest hourly rate multiplied by 130 hours per month)
  3. Federal poverty line – share of premium is less than 9.5% of the Federal Poverty Level for a single individual

Minimum Value

The coverage provides minimum value if it pays at least 60 percent of the total allowed cost of health care benefits provided to eligible plan participants.  The Department of Health and Human Services and the IRS created a minimum value calculator to determine minimum value.  An employer could also engage an actuary to determine this value.


There are two prongs to the penalties associated with not complying with the employer mandate.

  • In 2015 if the employer fails to offer coverage to 70% (95% in 2016 and going forward) of their full-time employees and their dependants, and at least one full-time employee obtains Exchange coverage and receives a subsidy, the penalty is equal:
    1. $2,000 x the number of full-time employees minus 80 (minus 30 in 2016 and going forward).
  • In 2015, if the employer fails to offer compliant coverage to 70% (95% in 2016 and going forward) of their full-time employees and their dependants, and at least one full-time employee obtains Exchange coverage and receives a subsidy the penalty equals the lesser of:
    1. $3,000 x the number of full-time employees receiving coverage from the Exchange and receiving a subsidy, or
    2. $2,000 x the number of full-time employees minus 80 (minus 30 in 2016 and going forward).


Beginning in 2016, ALEs are required to file information returns with the IRS and give statements to employees to report information about offers of health coverage for calendar year 2015.

If you have any questions about the above material please contact HoganWillig, Attorneys at Law at (716) 636-7600 or visit www.hoganwillig.com.  HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster and Buffalo.

Happy New Year! Begin 2015 With These Small Business Legal Resolutions

Author: Hogan Willig

December 9th, 2014

It is that time of the year again-when we reflect on the year that was and look forward to new beginnings.  We also resolve to be better people: help others, exercise more, eat better, stress less, save more are all popular.  But what about your business?

Focus on the big picture–Many small business owners focus all their attention on the day to day operations of the business and neglect the bigger picture.  It is important to set aside time every so often and plan for the future. Have a plan, create a growth strategy, implement a social marketing campaign.  Focusing some of your attention on the future will help you better prepare your business.  Because that distant day will be here before you know it.

File all your legal documents–If you are like many small business owners you have great intentions of filing legal documents. If you have been thinking of trade marking your name or logo make 2015 the year to do it.  Did you form an LLC in New York but never completed the publication requirement? Do so now.  Are you a sole proprietor? Now is the time for you to formalize your business entity.

Review your business insurance policies—If your policy is more than two years old now is a good time to review it.  Ensure the policy adequately covers your current needs.  Has the business expanded to another location? Did you introduce a new product? Did you hire new employees? Keeping your policy up to date with your business will ensure that you are protected should you need to use the policy.

Warmest thoughts and best wishes for a happy, healthy and prosperous New Year!!!

Start Protecting your Business in the Early Stages of Planning

Author: Krystal Chapin

September 22nd, 2014

In order to position oneself to reach the highest level of success and benefits available from starting your own business, it is important to begin with a solid foundation. Starting up a business is not something that can be done overnight: months, sometimes years of planning must take place before an adequate model is in place. The majority of business owners will pronounce their support for involving a lawyer during these crucial planning stages. The result could save you hassles and money later on. There are various different legal issues you can plan for before you get your business off and running.

One of the most important business decisions an owner will make initially is whether or not to incorporate or form a limited liability company (LLC). It is important to realize that if your business is not in one of these two structures, you will be subject to personal liability for the debts of your business. With a corporation or LLC, your losses are protected to be limited to the amount of your investment in the business, rather than your personal losses exceeding the investment. If you decide that a partnership is a more suitable business plan, you will be in need of a partnership agreement. This document will cover the rights and responsibilities of the parties involved, as well as address in advance, the countless scenarios that may arise.

Many businesses arise due to the creation of a product or idea. If this is the case for your business, it may be imperative that you get a patent to protect any inventions or new processes that your business will use. Without these useful licensing documents, your competitors are likely to replicate and benefit from your idea. It may also be the case that a business owner will want to trademark the name of their business or product. Corporate and Business Law lawyers are well versed in these processes and can make sure your business is legally protected from harm.

Lastly, most businesses are not a one-man-show; they require the time and dedication of numerous employees. The terms of employment for workers are an important aspect of a business plan that should not be overlooked. Internal and external relationships the business will formulate will undoubtedly create the need for many contracts to protect the owner and business from confidentiality breaches and other definite risks. The bigger the impact of the contract is, the more vital it becomes that a lawyer participate in its formation and negotiation.

At HoganWillig, our corporate and business law team knows that business owners and entrepreneurs operating in New York State face a multitude of legal issues. Our goal is to provide practical, useful advice that proves to you the value of engaging corporate legal counsel. We provide a wide variety of legal services to our business clients, from formation to dissolution and everything in between.

Supreme Court Hobby Lobby Ruling: Beyond Birth Control

July 3rd, 2014

On Monday, June 30th, a divided Supreme Court ruled that closely-held, for-profit corporations are not legally obligated to provide contraception coverage to their female employees.  Initially, the case began when Hobby Lobby, a Christian-owned craft supply chain, and Conestoga Wood, a Pennsylvania-based and Mennonite family-owned wood manufacturer, decided to challenge the contraception mandate included in the Affordable Care Act.  They argued that complying with the mandate, which requires companies to provide birth control to female employees at no cost, violates their religious freedom by forcing them to pay for contraception methods that they are morally opposed to.  They argue that certain forms of birth control, such as intrauterine devices and emergency “morning after” pills, too-closely resemble abortion because they could prevent a fertilized egg from implanting.

Prior to the ruling, the Obama administration had already granted an exception for churches, and had made accommodations for religious hospitals, schools and non-profits.  For-profit corporations were still required to either comply with the coverage rule or pay a fine.  Now, the Supreme Court’s decision expands the contraception mandate exception to encompass for-profit corporations that are religiously-held.  However, this exception applies to birth control only, and does not give religious employers the ability to refuse to cover other medical services that they might object to, such as vaccines or blood transfusions.

The majority opinion was authored by Justice Samuel Alito, who stated that within the Affordable Care Act, the Obama administration failed to demonstrate that the mandate was the “least restrictive means of advancing its interest.”  However, many believe that this ruling opens the door to a wide range of issues in the future on the grounds that a for-profit company can obtain a religious exemption, essentially allowing the employer to pick and choose which portions of the law to follow.  Justice Ruth Bader Ginsburg filed the dissenting opinion, asserting that the decision is less narrow and more far-reaching than the majority suggests: “In a decision of startling breadth, the Court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”

The ruling may blur the lines of religious freedom rather than clarify them.  Some are concerned about the ruling’s enhancement of “corporate personhood,” as it recognizes that a company itself can have a religious identity, which in turn affects its employees.  Further, the decision may complicate many citizens’ decisions about their healthcare coverage.  While it has always been typical for people to rely on their employers for healthcare plans, as companies acquire an increased say over the coverage they offer, Americans may look elsewhere, on their own.  Thus, the Hobby Lobby case may give rise to subsequent decisions on religious freedom, civil rights, corporation status, and healthcare in the not-so-distant future.

When is an unpaid internship illegal?

June 26th, 2014

During the summer months, thousands of college students and recent graduates flock to companies and organizations for internships in the hopes of bolstering their resumes.  About half of these positions do not offer the students any compensation.  Although there is a mutual benefit in the tradeoff between experiential learning for the students and free labor for the organization, there is growing concern within the workforce that many of these unpaid internships are illegal in their failure to comply with wage and hour law.

Non-profit organizations are less likely to incur violations because people can legally do unpaid work for them in the form of volunteerism. However, the U.S. Department of Labor warns for-profit companies that it is difficult to establish unpaid internships that comply with the law.  Companies often rely on summer programs as a “trial run” to determine whether or not they want to offer the student a full-time position post-graduation, and students with high hopes of getting these coveted job offers are unlikely to complain about working for free. For these reasons, violations of labor law are widespread in the realm of summer internships, but difficult to identify or stop.

Generally speaking, if the intern derives a greater benefit from the unpaid internship than the company does from the free labor, the internship can be considered legal.  For example, the completion of summer internships satisfies academic credit requirements for many colleges.  However, if the employer is the “primary beneficiary” of the intern’s labor, the intern should be compensated at least minimum wage and be covered by the protections of federal wage and hour law.  The Labor Department offers these six rules for employers establishing unpaid internships:

  1. They must give training similar to that of an academic or vocational institution
  2. They must not displace existing workers
  3. They must give prime benefit to the intern
  4. They must not give immediate advantage to the employer
  5. They do not promise a future job
  6. There is a mutual understanding that the position is unpaid

If you or your organization has any questions or concerns about the legality of unpaid internship programs, please call the offices of HoganWillig at (716) 636-7600.

Changes to New York Law Impacting Not-for-Profit Corporation

Author: Kevin Mahoney

May 19th, 2014

Towards the end of December, 2013, the Governor signed the “New York Non-Profit Revitalization Act of 2013″ which contains a number of changes primarily to the Not-for-Profit Corporation Law most of which become effective July 1st of this year. Changes to the law can impact your company based on a number of different factors, such as its size and purpose. The following are some highlights that may affect your company.

  1. There used to be four classification types based upon an organization’s purpose (A-D). The statute now uses a different characterization scheme, where not for profit corporations are classified as being either “charitable” or “non-charitable.” This classification change has occurred automatically and your organization does not need to file any new paperwork in that regard.
  2. The Attorney General is granted some new enforcement powers which in large part relate to preventing improper private benefits at the corporation’s expense. Preventing improper transactions as a result of conflicts of interest is certainly a focus of this legislation. The take away for your company is that it is important for you to document your process relative to significant transactions in order to be able to prove that you have complied with the law, that your transactions were appropriate, and also to assist your company should the Attorney General’s Office become involved in reviewing your transactions.
  3. All Not-for-Profit Corporations need to adopt a conflict of interest policy unless one already exists. That policy needs to have six main components:
    • Define the circumstances that constitute a conflict of interest;
    • Provide the procedure for disclosing conflicts of interest;
    • Prohibit the person with the conflict of interest from being present at or participating in deliberations on the matter;
    • Prohibit any attempt by the person having the conflict to improperly influence deliberation or voting on the matter;
    • Require that the resolution of the conflict being documented in the corporate records; and
    • Provide procedures for disclosing, addressing and documenting conflict of interest situations.
  4. Additionally, every director (board member) must submit annually a disclosure statement to the Board identifying any relationships or transactions which may give rise to a conflict of interest.
  5. Your organization may enter into transactions with “related parties” (defined as including any director, officer or key employee, a “relative” which extends to great grandchildren) as long as it has been determined by your governing body that the transaction is fair, reasonable and in the best interests of your company. To the extent that there is a “substantial financial interest” in this transaction by the “related party,” the company also must consider (1) available alternatives to the extent possible, (2) approve the transaction by a majority vote; and (3) at the same time document the basis for the approval including the consideration of alternatives.
  6. There is a prohibition now that committees for the corporation (those including non-directors) shall not have the authority to bind the board or the company. To the extent that your company had delegated that level of authority to a committee, it should be re-structured so the final decision resides with the board or the company.
  7. The financial threshold for required CPA reviews and/or audits have also been amended. Ultimately, your fiscal year gross revenue determines what would be required of your company.
  8. There is a “whistleblower policy” requirement for not for profit corporations that have twenty or more employees and, in the prior fiscal year, had annual revenue greater than one million dollars.
  9. There were some changes to allow certain board and member activities to be dealt with via fax or email. Board members are permitted to participate in board and committee meetings via video conference or other forms of video communication.
  10. Additionally, meeting notices and waivers of meeting notices will also be permitted to occur by fax/email. As you may know, the Not-for-Profit Corporation Law currently requires that a written notice of any meeting where any action is to be taken be provided to each member stating the place, date and time of the meeting. That notice currently needs to be provided personally (via hand delivery) or by mail. As of July 1, 2014, those notices can be provided by facsimile or email. Please note that those are the only acceptable forms of providing the notice. In other words, a listing of meeting dates in a Bylaw or policy, a posting on a bulletin board or a message on Facebook does not constitute personal, mail, fax or email notice. Generally, a notice must be provided at least 10 days, but not more than 50 days, before the meeting depending upon the type of meeting. It also should state what action(s) may be taken at the meeting, as well as who has called for it.

That meeting notice may be waived by any member either in person or by proxy before or after a particular meeting. After July 1, 2014, that waiver of notice may be written or provided by email or facsimile.

Of course, whether or not the actions of your company ever come under review is something only time will tell. Nonetheless, it only makes sense that the law is followed so that those actions are authorized and then not likely to be disturbed.

This is a general summary of some of these recent changes. There are more detailed requirements contained in the law so they should be consulted in greater detail. If you have questions or concerns relative to these changes and how they impact your company, please do not hesitate to contact the offices of HoganWillig at (716) 636-7600.

Taking Steps to Ensure that Your Business is “Divorce-Proof”

April 25th, 2014

Parting ways with your spouse does not necessarily mean divorcing your business.  In an ideal situation, you and your spouse hopefully agree that it is in both of your best interests to preserve the business so that it continues to provide income.  In a divorce, a privately-held business can be a significant portion of the marital assets.  As a result, it may be subject to division in the settlement and, without the proper arrangements, could be liquidated or fragmented.

There are several important steps that you can take to “divorce-proof” your business.  Perhaps most importantly, a prenuptial agreement drafted by a family law attorney is a crucial precaution, as it clearly identifies the business as your separate property, rather than as marital property; if you are already married, a postnuptial agreement may do the same.  It is also advisable to visibly position the business as your employer, and keep all business-related finances separate from your personal finances.  Buy-sell agreements can also be useful in preventing claims on the business by your spouse.

Protecting your business in the event of a divorce falls under the same category of important preventative measures as property insurance and liability insurance.  Including a defense against divorce is a wise step in constructing your long-term business plans.  If you have any questions or would like to speak with a family law or corporate attorney, please do not hesitate to call HoganWillig at (716) 636-7600.


We Practice Law for Your Peace of Mind